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Lessons learned from
the planning and early
implementation of the
Social Impact Bond at
HMP Peterborough
Emma Disley, Jennifer Rubin, Emily Scraggs,
Nina Burrowes, Deirdre May Culley
Prepared for the Ministry of Justice
EUROPE
The research described in this document was prepared for the Ministry of Justice.
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Preface
This report was produced for the Ministry of Justice and sets out findings from the first
phase of the independent evaluation of the Social Impact Bond at Peterborough. It is
available on the Ministry of Justice website: www.justice.gov.uk/publications/research.htm,
and is posted on the RAND Europe website with permission from the Ministry of Justice.
The views expressed are those of the authors and are not necessarily shared by the Ministry
of Justice (nor do they represent Government policy).
RAND Europe is an independent not-for-profit policy research organisation that aims to
improve policy and decision making in the public interest, through research and analysis
RAND Europe’s clients include European governments, institutions, NGOs and firms
with a need for rigorous, independent, multidisciplinary analysis. This report has been
peer-reviewed in accordance with RAND’s quality assurance standards.
For more information about RAND Europe or this document, please contact.
Dr Jennifer Rubin
Director, Communities, Safety and Justice Programme
RAND Europe
Westbrook Centre
Milton Road
Cambridge CB4 1YG
United Kingdom
Tel. +44 (1223) 353 329
reinfo@rand.org
iii
Contents
Preface ........................................................................................................................ iii
Table of Figures ..........................................................................................................vii
Summary .....................................................................................................................ix
CHAPTER 1
Introduction..................................................................................... 1
1.1 What is a Social Impact Bond? .......................................................................... 1
1.2 The world’s first SIB at HMP Peterborough...................................................... 2
1.3 Aims of this evaluation and of the report ........................................................... 3
1.4 Research approach and limitations..................................................................... 4
1.5 What can the Peterborough SIB test, and what are its limitations? ..................... 7
1.6 Timeline and process of developing the SIB at Peterborough ............................. 8
1.7 Structure of the report ..................................................................................... 10
CHAPTER 2
2.1
2.2
2.3
2.4
Contractual arrangements for the SIB and risks and benefits
to stakeholders ............................................................................... 11
Contractual relationships in the Peterborough SIB .......................................... 11
Risks under the SIB ......................................................................................... 16
Broader, non-contractual benefits to parties under the SIB .............................. 17
Benefits to investors......................................................................................... 19
Conclusion and potential lessons for future SIBs ............................................. 20
CHAPTER 3
Investment in the SIB ..................................................................... 23
3.1 Investors and investment in the SIB at HMP Peterborough ............................. 23
3.2 The SIB appears to have attracted some new funding to criminal justice.......... 24
3.3 Structure of investment in the SIB................................................................... 24
3.4 Grant versus investment funding ..................................................................... 24
3.5 Reasons for investing in the SIB ...................................................................... 25
3.6 Securing investment in future SIBs .................................................................. 26
3.7 Summary and lessons for future SIBs ............................................................... 29
CHAPTER 4
Outcome measures ......................................................................... 31
4.1 Reconviction events: the outcome measure ...................................................... 31
4.2 The Peterborough cohorts ............................................................................... 32
4.3 Stakeholder views on using frequency of reconviction...................................... 33
v
Lessons from the SIB at HMP Peterborough
4.4
4.5
4.6
RAND Europe
The control group ........................................................................................... 34
Attribution issues if SIBs or other PBR initiates are rolled out more
widely .............................................................................................................. 36
Summary: conclusions and potential lessons for future SIBs ............................ 36
CHAPTER 5
Outcome payments ........................................................................ 37
5.1 Expected return on investment and time lag until payments ............................ 37
5.2 Funding outcome payments............................................................................. 38
5.3 Pricing reconviction costs and savings and negotiating the tariff ...................... 38
5.4 Accounting for outcome payments .................................................................. 39
5.5 Summary: conclusions and potential lessons for future SIBs ............................ 39
CHAPTER 6
The intervention and uptake so far ................................................ 42
6.1 Nature of the cohort as at March 2011 ............................................................ 43
6.2 Uptake and engagement with the One Service ................................................. 44
6.3 Facilitation of the SIB by HMP Peterborough ................................................. 44
6.4 Knock-on benefits of hosting the SIB pilot ...................................................... 45
6.5 Effect of the SIB on other organisations in the area .......................................... 45
6.6 Challenges identified, overcome and remaining in implementation of
the One Service ............................................................................................... 46
6.7 Stakeholders’ assessment of the intervention model and service delivery to
date ................................................................................................................. 47
6.8 Summary: recommendations, lessons and conclusions ..................................... 47
CHAPTER 7
Conclusions and lessons ................................................................. 49
7.1 Departmental investment and creativity........................................................... 49
7.2 Characteristics and skills of future intermediaries ............................................. 49
7.3 Contracts ......................................................................................................... 49
7.4 Investors .......................................................................................................... 50
7.5 Outcome measures .......................................................................................... 50
7.6 Outcome payments ......................................................................................... 51
7.7 The intervention.............................................................................................. 52
REFERENCES 53
Reference List ............................................................................................................ 55
APPENDICES 59
Appendix A Methodology and approach – additional information on literature
search and key informant interviews ................................................................ 61
Appendix B Interview protocol .................................................................................. 63
Appendix C Further information on the intervention model ...................................... 71
Appendix D Tables – age and ethnicity of the Peterborough cohort as at March
2011 ................................................................................................................ 75
Appendix E Timeline of SIB development ................................................................. 77
Appendix F Logic model of the SIB ........................................................................... 79
vi
Table of Figures
Figure 1 Process map of financial processes in the Peterborough SIB .............................. 41
Figure 2 Breakdown of offenders by age band – Peterborough cohort compared to
national sample ............................................................................................ 43
Figure 3 Breakdown of offenders by ethnicity – Peterborough cohort compared to
national sample ............................................................................................ 44
vii
Summary
The aim of this report is to identify early lessons from the development and
implementation of the Social Impact Bond (SIB) at HMP Peterborough. Such lessons may
inform future SIBs or wider payment-by-results (PBR) pilots under consideration by the
Ministry of Justice and other government departments.
This is the first output of an independent evaluation of the Peterborough SIB
commissioned by the Ministry of Justice. It is based on the findings from interviews with
22 individuals from organisations involved in the development and implementation of the
SIB at Peterborough. The interviewees were well-informed about the SIB, having been
closely involved in its development. However, given the early stage of development of the
Peterborough SIB, we are unable to draw conclusions about or comment on outcomes.
Furthermore, because the interviewees’ expertise relates specifically to their experience of
Peterborough, we raise issues and potential lessons for other SIBs and initiatives, but are
cautious in attempting to generalise lessons from the interviews for wider roll-out of SIBs
or other PBR arrangements. Rather, this report is a first step towards developing a more
robust evidence base on this new funding mechanism and raising some of the issues that
this stage of the research has surfaced. Therefore, we have gathered and independently
reported the views of key individuals involved in the development of the SIB, drawing out
where possible potential lessons for wider roll-out.
A SIB is a form of PBR, potentially benefiting a range of stakeholders.
•
For government a SIB aims to remove the financial risk that government pays for
services that prove to be ineffective at addressing social needs and improving
outcomes. Also, in a SIB it is a delivery agency or intermediary, rather than
government, that commissions service providers.
•
For investors a SIB offers a ‘mission-aligned’ investment opportunity, as well as
potential return on investment.
•
For service providers a SIB provides upfront funding for the delivery of services
(so they do not carry the risk of not being paid).
•
For the public and service users funding raised through a SIB may pay for
services that fill a gap in existing provision.
Contractual arrangements
Interviewees perceived contractual relationships behind the Peterborough SIB to be complex.
This is understandable, given the novelty of the SIB at Peterborough, and the need to
ix
Lessons from the SIB at HMP Peterborough
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capture methodologically detailed arrangements for determining outcomes and payments.
The nature of the legal relationships between the parties to the Peterborough SIB may
provide, in part, a transferable model for future SIBs in offender management or other
policy areas.
Investment
The SIB at HMP Peterborough provides an opportunity to test the concept of a payment-byresults model which raises funds through, and shifts risk to, non-governmental investors.
Funding for the SIB at HMP Peterborough is largely from foundations and charities.
Features of the Peterborough SIB which may have attracted investment include trust in
Social Finance (the financial intermediary) and the service providers commissioned by
Social Finance, the desire to support a potentially innovative, emerging funding
mechanism, and alignment with a charitable interest in criminal justice and offender
rehabilitation.
There was an appetite for mission-aligned investing among the charitable organisations
interviewed for this report. Many of the charitable investors in the Peterborough SIB
invested using their endowment capital rather than by giving a grant. Measures which
might encourage investment in future SIBs and other PBR pilots include clarifying
trustees’ fiduciary duties as regards social investments and offering tax incentives for
investing.
The Peterborough SIB appears to have attracted some new sources of funding. A SIB aims to
provide new funding to deliver public services, and some of the investors in the
Peterborough SIB had not previously funded criminal justice interventions. Those
developing and operating future SIBs may wish to monitor the additionality of funding.
Risk transfer
Interviewees believed that financial risks appeared to have been successfully transferred from
both the Ministry of Justice and small providers to the private investors. However, at this early
stage the success of assigning risk in the Peterborough SIB contracts is yet to be tested. All
parties involved bear some reputational risks from participation in the world’s first SIB.
For providers (which are paid upfront and not by results in the Peterborough SIB) this
may provide an important motivation to perform well.
Delivery agencies or intermediaries
The ability of Social Finance to engage and negotiate with different stakeholders appears to have
enabled development of the Peterborough SIB. Interviewees from the Ministry of Justice said
it is likely that if there are SIBs in the future, the delivery agency will be appointed by
competitive tender. The range of skills associated with a successful intermediary may
include technical skills (in negotiating contracts), financial knowledge, expert knowledge
(or the ability to get up to speed quickly) in the relevant policy areas, and skill to negotiate
with a range of stakeholders including the government, investors, and local organisations
and agencies potentially affected by implementing a SIB.
Commissioning
The Peterborough SIB potentially involves a new commissioning relationship. In other
payment-by-results arrangements, government has tended to maintain some control over
the selection of providers. In the Peterborough SIB the government leaves that selection to
x
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Summary
an intermediary (such as Social Finance in the Peterborough SIB) and has no direct
relationship with the service provider.
The Peterborough SIB raises questions about the role and quality of evidence demanded by
intermediaries and investors. In selecting organisations to provide SIB-funded services,
investors and intermediaries have an interest in selecting those who can provide evidence of
their effectiveness. Future SIBs might test whether such robust evidence is available, and
how it features in investors’ decision making.
Outcome measures
The Peterborough SIB tests whether and how, in this instance, stakeholders can develop feasible
and suitable outcome metrics in the area of offender interventions. The development of a
methodologically robust outcome measure, which had the confidence of all stakeholders,
was a time-consuming and analytically complex process. Future SIBs and/or PBR
arrangements in new policy areas may wish to take into account the time and skills needed
to develop outcome measures.
Statistical significance and attributing change to the SIB-funded intervention were crucial
elements in negotiation of the outcome measure for the Peterborough SIB. These measurement
issues are likely to be central in future SIBs and other PBR mechanisms in offender
management and other policy areas. There is a balance to be achieved between the
robustness of the outcome measure and time, simplicity, resources and data availability.
The design of the Peterborough SIB aims to reduce incentives to ‘cherry-pick’. A risk in PBR
models is that providers focus on members of the target group who are the easiest to help.
In Peterborough, outcomes are measured among all offenders discharged from HMP
Peterborough, rather than just those who engage with SIB-funded services. Furthermore,
frequency of reconviction is measured as the key outcome rather than a binary measure of
whether offenders were reconvicted or not. However, if the approach were rolled out
nationally, there could be incentives to ‘cherry-pick’ by prison or area.
Outcome measurement in the Peterborough SIB relies upon a comparison with a control group,
but this cannot be rolled out nationally. If all short-sentenced prisoners received SIB-funded
interventions, there would be no control group with which to compare the effects of the
intervention. Future SIBs must develop and test other ways of measuring counterfactuals
(for example, before-and-after measures).
Payment model
The Peterborough SIB tests whether and how, in this instance, stakeholders can agree upon a
payment model. Development of the payment model demanded considerable analytical
resources and relied upon the availability of Ministry of Justice data about the cost of
reconviction events. Those developing new SIBs and other payment-by-results mechanisms
in new policy areas may wish to consider the extent to which robust cost data are available.
The Peterborough SIB is likely to provide the first evidence of the performance of SIBs as a new
kind of financial product, at least in the area of offender interventions. Developing a track
record of investment is crucial to building an investor base and improving understanding
of outcome risk.
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Lessons from the SIB at HMP Peterborough
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The Peterborough SIB is too small to deliver substantial ‘cashable’ savings (monetised benefits).
The ability of the SIB model to lead to identifiable savings for government is yet to be
tested, if the SIB model is implemented on a larger scale.
Future SIBs may face the challenge of sharing outcome payments across central and local
government departments or other agencies. Outcome payments are made by the Ministry of
Justice and the Big Lottery Fund in the Peterborough SIB, but potentially a range of local
and national government departments could benefit.
xii
CHAPTER 1
Introduction
This report presents the findings of interviews with 22 individuals involved in the
development and implementation of the Social Impact Bond (SIB), launched at HMP
Peterborough in September 2010. It draws on stakeholders’ experiences of this process to
identify, where possible, early lessons from this SIB which might usefully inform future
SIBs or other payment-by-results (PBR) pilots under consideration by the Ministry of
Justice and other government departments.
Given the early stage of development and the reliance on stakeholder views and experiences
to date (we did not interview individuals who were outside the process or who had not
been involved in the development of the SIB), this document represents some first steps on
the path to developing an evidence base on SIBs.
1.1
What is a Social Impact Bond?
Payment by results allows the funding of public services whereby government pays for
services if and when they show improvements in defined and measured outcomes for their
target group. In previous PBR arrangements it is the service provider that is paid by
results.1 However, there has long been concern that some, especially smaller, providers
(who may be well-placed to deliver services that respond to the needs of their local
communities) may be unable to bear the upfront costs of providing services under PBR
schemes (see for example, Community Links, 2010).
A SIB2 is a form of PBR. In a SIB, investment funding is obtained from private, nongovernment investors to provide upfront funding for the provision of interventions to
improve social outcomes. If these programmes succeed in improving social outcomes, this
could result in savings to government (which will not need to pay for services that
otherwise would be used by individuals with poor social outcomes) and wider benefits to
society. As part of a SIB, the government agrees to pay a proportion of these savings back
to the investors. If the outcomes do not improve, investors lose their investment.
1
For example, the Department for Work and Pensions held outcome-based contracts with private and
voluntary providers in the provider-led Pathways to Work Initiative (Hudson, et al., 2010).
2
While this term has now been widely adopted to describe the current initiative, the term ‘bond’ is not entirely
accurate as the payment is not guaranteed. Social Finance describes it as ‘a hybrid instrument with some
characteristics of a bond (e.g. an upper limit on returns) but also characteristics of equity with a return related
to performance’ (Social Finance, 2010c).
1
Lessons from the SIB at HMP Peterborough
RAND Europe
As a form of payment by results, a SIB has the following potential benefits for different
stakeholders.
1.2
•
For the government – a SIB is a form of payment by results which removes the
upfront costs of service delivery from government and shifts the financial risk to
private investors, who lose their investment if interventions do not improve
outcomes (Social Finance, 2010e, p. 53).
•
For service providers – unlike other PBR mechanisms, service providers are not
paid by results and do not bear the risk in the SIB. Providers are paid upfront,
which provides opportunities for not-for-profit and third sector organisations,
which could not bear the risk under traditional PBR arrangements, to deliver
services. Another way in which SIBs are different from other PBR schemes is that
under a SIB, several different providers can deliver services that contribute to
improved outcomes.
•
For investors – SIBs offer a new investment opportunity with a ‘blended return’
(Mulgan, et al., 2010); investors receive some financial return but also value the
social returns on their investments.
•
For society – SIBs may improve outcomes and quality of life by funding service
provision where there previously was none. It is claimed (New Philanthropy
Capital, 2010) that SIBs might be particularly used to fund preventative
interventions, or other kinds of service delivery which governments might not
prioritise for funding – especially in a time of limited resources.3 In a SIB the
government is not prescriptive as to the way in which services are delivered; it is
hoped this may encourage innovation in service provision. Further, in some of the
literature on SIBs it is suggested that private donors and organisations may be
willing to consider more innovative and/or riskier projects than government is
likely to fund (Loder, et al., 2010). Whether SIBs will encourage innovation is as
yet untested, and is something which will be explored in later stages of this
evaluation.
•
For service users – some groups, including offenders, may be less attractive
beneficiaries for both charitable giving and government spending. SIBs may raise
funding to deliver interventions to these groups (Loder, et al., 2010).
The world’s first SIB at HMP Peterborough
In September 20104 the Ministry of Justice entered into a SIB mechanism for funding
public services (Gurria, 2010; Strickland, 2010). Social Finance,5 a financial intermediary,
3
Preventative programmes such as early childhood interventions may take years for their effects to be realised,
meaning that investors have a long wait for return on investment
4
This is the date of the launch – the contracts for the Peterborough SIB were signed in March 2010.
5
‘Social Finance is a London based organisation created in 2007 with the express aim of developing an effective
social investment market in the UK. The organisation provides access to capital and advice to investors and
social sector entities interested in delivering significant social impact’ (Ministry of Justice, 2010c)
2
RAND Europe
Introduction
obtained approximately £5 million of investment funding from private individuals and
charities. This fund is being used to pay for interventions for offenders serving short prison
sentences (less than 12 months) at HMP Peterborough. Currently, short-sentenced adult
offenders are not given any statutory supervision by the Probation Service on release from
prison.
The Ministry of Justice has appointed6 independent assessors from QinetiQ and the
University of Leicester to undertake data analysis in order to determine whether offenders
who receive interventions on release from Peterborough are reconvicted less than similar
‘matched’ offenders from other prisons who do not have access to SIB-funded
intervention. If members of the Peterborough cohort are reconvicted7 less than offenders in
the comparison group in the year following their release from prison, then the SIB will
have entailed benefits for the Ministry of Justice and wider society, in the form of
improved outcomes for the offenders and for their communities, which experience less
crime. In addition, there will be benefit to the government which, in theory, will have
saved money through reduced costs of policing, court cases, prison places, and so on. If the
independent assessor calculates that reoffending has reduced by at least 10% for each
cohort, compared with a matched comparison group, the Ministry of Justice and the Big
Lottery Fund have undertaken to pay a return on investment to investors for this improved
outcome.
For the Ministry of Justice, the aims of the SIB at Peterborough are as follows:
1.3
•
to test the concept of payment by results and provide lessons to inform future
PBR projects. In addition to the SIB at Peterborough, the Ministry of Justice has
committed to pilot other PBR programmes across the country for the
rehabilitation of offenders on community sentences and for short-sentenced
prisoners (Ministry of Justice, 2010a, p. 42); and
•
to (potentially) reduce reoffending by short-sentenced prisoners.8
Aims of this evaluation and of the report
The Ministry of Justice has commissioned RAND Europe to conduct an independent
evaluation of the SIB at HMP Peterborough. This evaluation is conducted separately to,
but in co-operation with, the work of the independent assessor who is responsible for
examining reconviction events among the cohort and matched comparison group.
The key research questions for this evaluation are as follows.
1. What were the strengths and weaknesses of the SIB contractual model as
implemented?
6
The independent assessors were contracted via a competitive tendering process and with the approval of
Social Finance
7
In the SIB at Peterborough the outcome being measured is reconviction events – the number of times that an
offender receives a conviction in court. Reconviction is a proxy measure for actual reoffending.
8
Outcome payments are to be made by the Ministry of Justice and the Big Lottery Fund.
3
Lessons from the SIB at HMP Peterborough
RAND Europe
2. To what extent – and how and why – did stakeholders feel that the SIB led to
greater innovation and/or efficiency?
3. How, if at all, did the pilot lead to better outcomes of reduced reoffending? The
focus of this evaluation is the operation and process of delivering SIB-funded
interventions, rather than determining whether or not outcomes changed,
although we will draw upon data produced by the independent assessor about
reconviction events.
4. How did the actual economic costs and benefits of the SIB compare to those
stated in the business case? Using data about reconviction events produced by the
independent assessor we will conduct an economic analysis.
5. What does this pilot tell us about the viability of further payment-by-results
models in offender management, and how these should be designed or managed?
This report is the first output of the independent evaluation and primarily contributes to
answering questions (1) and (5). The aim of the report is to identify any initial lessons
from setting up the SIB at Peterborough which may inform future SIBs or wider PBR
pilots under consideration by the Ministry of Justice and other government departments.
Later stages of the evaluation will address the other research questions, as well as providing
further evidence in relation to questions (1) and (5). The second report from the
evaluation will follow once data are available from the independent assessor on the
reoffending outcomes relating to the first cohort of offenders.
1.4
Research approach and limitations
Key informant interviews
This report is primarily based on semi-structured interviews with 22 stakeholders and key
informants from the Ministry of Justice, Social Finance, the National Offender
Management Service (NOMS), HM Treasury, the Big Lottery Fund, HMP Peterborough
and the St Giles Trust. We also interviewed three representatives from organisations who
had invested in the Peterborough SIB (see Table 1). These interviews were conducted in
December 2010 and January 2011 (the interview protocol is included in Appendix B). As
indicated in the protocol, we explored some topics in more depth with some interviewees
than with others, according to their role in the development of the SIB. However, we
allowed and encouraged interviewees to raise and respond to a range of issues, including
those outside their particular role in the development of the Peterborough SIB.
4
RAND Europe
Introduction
Table 1 List of interviewees
Interviewee
number
1
Organisation
Role
13
14
15
16
17
18
19
20
21
National Offender Management Service
(NOMS) East
St Giles Trust
Ministry of Justice
Social Finance
Social Finance
National Offender Management Service
(NOMS) East
Ministry of Justice
Ministry of Justice
Big Lottery Fund
Treasury
Ministry of Justice
National Offender Management Service
(NOMS)
Ministry of Justice
St Giles Trust
St Giles Trust
Panahpur
Social Finance
HMP Peterborough
HMP Peterborough
LankellyChase
HMP Peterborough
22
Esmeé Fairbairn Foundation
2
3
4
5
6
7
8
9
10
11
12
Regional Manager for Commissioning
Director
Senior Civil Servant
Director
Director
Director of Offender Management
Policy Advisor
Representative from Analytical Services
Deputy Director
Member of Home and Legal Spending Team
Senior Civil Servant
Director of Service Development
Representative from Procurement
Head of Community Services
Community Services Manager
Investor
Reducing Reoffending Director
Director
Deputy Director
Investor
Former Director (Director at the time of SIB
development)
Investor
The focus of this research was on the experiences and views of a sample of those involved
in this first SIB. We interviewed at least one person (and in several cases, two or three
people) from each of the organisations and stakeholder groups that we had identified as
being involved in the development of the SIB. While we aimed through this process to
capture a range of perspectives, we are not able to say how representative our interviewees
were of their organisation.
Given the constraints of resources and scope agreed with the commissioning team, we did
not interview other potential stakeholders who were not involved in developing the SIB
and who may have provided a different perspective. In addition, this report does not
include the perspectives of service users.9
As an evidence base, key informant interviews have strengths and weaknesses. On the one
hand, given that this is the first SIB to be developed and implemented, those involved in
its development have specialist knowledge based on their unique experiences. On the other
hand, inevitably they are partial, given their close involvement.
The interviews were audiotaped and fully transcribed. The interviews were analysed
independently by three members of the research team. The starting point for our analysis
was the top-down themes drawn from the key research questions. We then returned to the
transcripts and took a more bottom-up approach, looking for ideas, issues, information,
successes and concerns which the interviewees raised but which did not correspond to
9
For further discussion of the approach and methodology, see Appendix A.
5
Lessons from the SIB at HMP Peterborough
RAND Europe
particular research questions. We drew up a long list of these topics, issues and ideas and
discussed them at an internal synthesis workshop. We considered three aspects:
•
whether the issue or idea has relevance to an implicit or explicit theory of the
operation of the SIB;
•
whether the issue or idea raises a barrier or facilitator to implementation and
success not previously identified; and
•
whether the idea was relevant to applying the SIB to wider criminal justice or
other policy areas.
Across the stakeholder groups there was a considerable degree of consensus, both in the
accounts of how the SIB was developed (and the organisations involved in and driving
this), and regarding the risks and benefits of the SIB. During the later stages of this
evaluation we will revisit these views and explore change and any divergence over time.
Review of contracts
In addition to conducting interviews the research team viewed some sections of the
redacted contract between the Ministry of Justice and Social Finance. This provided an
independent verification of factual information about the outcome measures as well as
some information about the relationship between Social Finance and the Ministry of
Justice.10 However, the research team did not see other contracts (see Figure 1 for an
overview of the contractual processes).
Descriptive statistical analysis of Police National Computer data
We were provided with data by the Ministry of Justice from the Ministry of Justice’s
extract of the Police National Computer. This data provides information about the age
and ethnicity of offenders in the Peterborough cohort as at March 2011. In addition,
comparative data on a national sample of short-sentenced offenders discharged from
prisons nationally in the first quarter of 2008 (the most recently published data) was
provided by the Ministry of Justice.
Review of the limited available literature on SIBs
While we reviewed publications by the Ministry of Justice and Social Finance, there is as
yet little written on SIBs. As the first example of this funding mechanism there are no
other experiences or examples with which to compare the Peterborough SIB.
Of course, we recognise that there is a considerable literature on and experience of
payment-by-results initiatives in the UK and abroad. However, within the timeframe and
budget for this first phase of the research, our remit was not to review this but to gather
specific learning from stakeholders involved in the early implementation of the SIB, rather
than to identify wider and potentially transferable lessons from other experiences of PBR,
private finance, and so on.
10
The contract was redacted to protect commercially sensitive information.
6
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1.5
Introduction
What can the Peterborough SIB test, and what are its limitations?
Given that the aim of this report is to identify, where possible, lessons from the set-up of
the SIB at Peterborough which might inform future SIBs and other PBR pilots, it is
helpful to outline those issues which can be tested by the Peterborough SIB, and those
which cannot.
The Peterborough SIB might be thought of as a ‘proof of concept’ of this form of PBR
rather than a pilot, because there are some questions and issues which the Peterborough
SIB will not be able to test.
We identify the following five key areas in which the Ministry of Justice may be able to
draw lessons from the Peterborough SIB for the wider roll-out of PBR models.
1. The SIB at HMP Peterborough provides an opportunity to test the concept of a
PBR model which raises funds through, and shifts the risk to, private, nongovernmental investors.
2. The Peterborough SIB tests whether and how, in this instance, stakeholders can
develop feasible and suitable outcome metrics in the area of offender interventions,
and agree upon a model to pay if outcomes are improved according to those
metrics.
3. The Peterborough SIB may provide evidence of the performance of SIBs as a new
kind of financial product, at least in the area of offender interventions. Developing
this track-record of investment will be crucial to building an investor base and
improving understanding of outcome risk, all of which is necessary to open up a
larger pool of capital.
4. The Peterborough SIB potentially involves a new commissioning relationship. In
other payment-by-results arrangements, government has tended to maintain some
control over the selection of providers, whereas in the Peterborough SIB the
government leaves the selection to an intermediary (such as Social Finance), and
has no direct relationship with the service provider.
5. Although the intervention funded by the SIB at Peterborough (mentoring
offenders) itself is not new, the SIB is an opportunity to test the impact of working
intensively with short-sentenced prisoners. It is an opportunity to begin to build a
robust evidence base on whether and how this was effective.
We identify the following as some issues which cannot be tested in the Peterborough SIB.
Outcome measurements relying on comparison with a control group cannot be rolled out
nationally
Improved outcomes among the Peterborough cohort are measured by comparison to a
matched control group which is not receiving the intervention. If every short-sentenced
prisoner in England and Wales could be part of a SIB, there would be no control group
with which to compare. Therefore, any future SIBs and PBR projects might test other ways
of measuring counterfactuals (for example, before-and-after measures).
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A small-scale SIB will not deliver substantial cashable savings
Clearly, while there are other good reasons for seeking to improve outcomes for the target
group in this SIB, the SIB model is based on the premise that the interventions funded will
deliver cashable savings to government within the period of the bond (Social Finance,
2010e, p. 52). The SIB at HMP Peterborough is not likely to result in substantial cashable
savings to the Ministry of Justice or other government departments, which can be achieved
only through significant reductions in the prison population or the number of court cases,
etc. Of course, there are other, non-cashable benefits to the public and victims if the
Peterborough cohort reoffends less, in which the Ministry of Justice is interested. There is
also the benefit of testing payment by results at a time of great pressure on public sector
budgets.
Future SIBs face the challenge of sharing outcome payments across the central and local
government departments and agencies that accrue savings
If reoffending within the Peterborough cohort is reduced, departments other than the
Ministry of Justice could make savings – for example, health services or the Department
for Work and Pensions. In addition, local agencies – for example, the police – might see a
reduced workload.
The SIB at Peterborough does not test whether and how different departments can share
outcome payments, but the potential for cross-departmental PBR schemes is mentioned in
the Ministry of Justice Green Paper (Ministry of Justice, 2010a, pp. 42-43), including
plans to work with the Department of Health and Department for Work and Pensions. At
the local level, local incentive schemes are being piloted in London and Manchester, in
which several agencies could reinvest the savings resulting from joint working to reduce
reoffending. This is in line with planned changes to NOMS for the devolution of
commissioning to local levels (Ministry of Justice, 2010a, p. 48).
Future SIBs may potentially focus on areas where there are existing statutory services.
Currently, short-sentence prisoners – the target of this SIB – do not receive any statutory
services. The clear advantage of this is that the SIB creates an opportunity for the Ministry
of Justice to improve rehabilitation outcomes for offenders without risking capital or
resources upfront. It also makes attribution easier, as the control group of offenders does
not otherwise receive statutory provision of services. SIBs in areas that currently receive
statutory provision will need to devise outcome metrics that enable the government to
isolate the effect of SIB-funded interventions from existing statutory services. Moreover,
focusing on services where there is otherwise no statutory provision avoids the many
difficult issues raised by the possible need to decommission statutory services in such
circumstances – another possible challenge for future SIBs.
1.6
Timeline and process of developing the SIB at Peterborough
It is helpful to present the story of the development of the SIB at Peterborough that
emerged from the interviews with stakeholders for this phase of the research. As explained
previously, there was a broad consensus about the progress of this process across the
interviewees from all stakeholder groups.
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Introduction
Developing the SIB took approximately 18 months from the point at which Social Finance
initially discussed the concept with civil servants, to its launch in September 2010 (see
Appendix E for an overview of the timeframe). The Peterborough SIB, which aims to
reduce reoffending, was selected from among a number of policy areas under consideration
by Social Finance which it was raising with civil servants, including children in care,
education, NEETS (people not in education, employment or training) and hospital
admissions (Social Finance, 2009, p. 5). According to the interviewees from Social
Finance,11 short-sentenced offenders were selected because:
•
they were a group which had poor outcomes (i.e. frequent reoffending);
•
there were clearly potential savings from improving those outcomes (i.e. the cost
of delivering interventions was less than the possible savings to the public sector);
and
•
there was currently no statutory provision of services for this group.12
Once short-sentenced offenders were chosen as the target group for a SIB, a selection
process began to identify a site for the SIB. The factors which the interviewees from Social
Finance, Ministry of Justice and National Offender Management Service (NOMS)13
reported to be among those relevant to the selection of a site were the need for a sufficient
number of discharged offenders, to recruit a sufficiently large cohort of offenders in order
to detect a statistically significant change,14 within a reasonable time period. However, the
more offenders, the more funding would be needed from investors to deliver the
interventions, so there was also consideration of the need to keep the level of upfront
funding achievable.
HMP Peterborough’s discharge rate means that a cohort of 1,000 offenders should be
recruited within about two years. This should be a sufficiently large enough sample to
detect a statistically significant reduction in reconviction events of 10%.15 HMP
Peterborough also has a relatively high proportion of local releases. In making this selection
it was felt that this geographic would help to facilitate the delivery of through-the-gate
interventions over a sustained period and tracking the outcomes of those interventions.
11
Interviewees 4 and 5.
12
For offenders who are sentenced to fewer than 12 months in custody, there is no requirement for supervision
by the Probation Service unless they are between 18 and 21 years old.
13
NOMS is an executive agency of the Ministry of Justice, bringing together the headquarters of the Probation
Service and HM Prison Service to enable more effective delivery of services. NOMS is responsible for
commissioning and delivering adult offender management services, in custody and in the community, in
England and Wales.
14
That is, to increase confidence that any change was due to the SIB-funded interventions rather than due to
chance.
15
See section 4.3 which discusses steps taken by the Ministry of Justice to ensure statistical significance in the
outcome measures.
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Structure of the report
Chapter 2 describes the contractual arrangements for the SIB at Peterborough, the process
of negotiating these contracts and the assignment of risk among the parties by these
contracts. While we have seen the redacted contract between the Ministry of Justice and
Social Finance, our understanding of the other contractual relationships and the
negotiation process relies on interviewees’ accounts. Chapter 2 also outlines some of the
non-financial risks and benefits to participation in the SIB, as reported by the interviewees.
Chapter 3 is about investment in the SIB. Based on interviews with representatives from
three investing organisations, it highlights some of their reasons for investing as well as
perceived barriers to SIB investments. The chapter also notes the issues which interviewees
mentioned may affect future investment in SIBs or similar payment-by-results schemes.
Chapter 4 focuses on the outcome measure, which in this SIB is ‘reduced reconviction
events’ against a matched comparison group. It outlines what the interviewees report was a
complex analytical process for both the Ministry of Justice and Social Finance, selecting a
robust outcome measure which balanced a number of methodological concerns with the
interests of investors. It outlines the interviewees’ perceptions of the strengths and
weaknesses of the outcome measurements in this SIB.
Chapter 5 describes the model for outcome payments to be made to investors. Again,
based on interviewees’ accounts,16 it outlines the development and negotiation of outcome
payment arrangements, the factors reported to play a role in this negotiation, and the way
in which any outcome payments will be calculated.
Chapter 6 largely reports on the information provided by interviewees from the St Giles
Trust and the reducing reoffending director from Social Finance, as well as from HMP
Peterborough. The chapter describes the intervention model funded by the SIB and
considers early reports of uptake among Peterborough prisoners between September and
November 2010. It examines the ways in which the prison and local agencies reportedly
have responded to implementation of the SIB.
Chapter 7 draws out the lessons learned from developing and implementing the SIB, in the
hope of providing some possible early learning for future SIBs and other payment-byresults models.
16
Due to commercial sensitivity we did not see official documentation relating to this.
10
CHAPTER 2
2.1
Contractual arrangements for the SIB
and risks and benefits to stakeholders
Contractual relationships in the Peterborough SIB
From our interviews we have identified six key contractual relationships within the
Peterborough SIB. These are between:
•
Ministry of Justice and Social Impact Partnership – the limited partnership set up
by Social Finance which is the contracting entity in the SIB
•
Social Impact Partnership and investors
•
Social Impact Partnership and providers (for example, St Giles Trust)
•
Ministry of Justice and independent assessors
•
Ministry of Justice and Peterborough Prison Management Limited17
•
Social Finance and the Big Lottery Fund.18
Figure 1 outlines our understanding of the processes through which each contract was
negotiated. This understanding is based upon interviewees’ perceptions of the process of
negotiation, and their views of the assignment of risk and responsibility. As outlined in
section 1.4 (Review of contracts), we had sight of some sections of the contract between
Social Finance and the Ministry of Justice, but have not seen any of the other contracts.
In this section we outline some challenges to drafting the contracts and how they were
overcome
A novel arrangement
There was consensus among the interviewees from Social Finance, Ministry of Justice
Procurement and HM Treasury19 that the SIB represented an entirely new funding model
for service provision. Similarly, one interviewee from NOMS noted that this was not
17
The consortium which holds the private finance initiative contract for HMP Peterborough.
18
‘The Big Lottery Fund’s investment in SIBs is part of Replication and Innovation, a new UK-wide funding
programme that aims to use BIG’s networks and funding experience to target deep-rooted social problems.
Over five years the programme will fund strategic initiatives working in carefully researched and identified
areas of need’ (Big Lottery Fund, 2010).
19
Interviewees 4, 5, 7, 10 and 13.
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something that it had done before. Financing, commissioning, contractual arrangements
and even some of the analytical questions raised are different from how government usually
operates in service delivery.
[It is] a novel complex venture for the Department our procurement team and their
lawyers and I think also for Social Finance.
(Interviewee 7, Policy Advisor, Ministry of Justice)
Under usual circumstances, government departments would seek to procure contractors
through a competitive tendering process that is viewed as increasing the likelihood of best
value for money from contractors. The contract between the Ministry of Justice and Social
Finance was not procured through such a process. Two interviewees from the Ministry of
Justice said the decision not to competitively tender this contract was taken on the basis
that Social Finance came forward with a proposal that appeared to be worth testing.20
These interviewees noted that there was high-level departmental support in the Ministry of
Justice to undertake a ‘proof-of-concept’ pilot. Two interviewees21 from the Ministry of
Justice stressed that the SIB was signed off by HM Treasury as representing value for
money for the department, and this was confirmed by an interviewee from HM Treasury.
The Ministry of Justice conducted detailed analytical work on which to base a business
case (we did not have sight of this as part of the research, so we are unable to comment on
its content).
Nonetheless, there remained a perception among the interviewees from the Ministry of
Justice22 (and this was noted by two interviewees from NOMS)23 that the Ministry of
Justice may have been able to drive a more competitive agreement on the value of the
outcome payments by competitively tendering the contract. The interviewees from Social
Finance were of the view that it would be difficult to procure a SIB through a traditional
tendering process on the grounds that building a SIB was a ‘collaborative effort’.24 An
interviewee from NOMS expressed a similar view:
I don’t know how we would have translated their [Social Finance] original approach into
a procurement.
(Interviewee 6, Director of Offender Management, NOMS East)
Developing a competitive market for SIB delivery agencies
Interviewees from the Ministry of Justice and NOMS25 said that there is interest in
competitively tendering any future SIBs, and Social Finance itself anticipates that a
competitive market will develop for SIB delivery agencies. Indeed, it has suggested that
20
Interviewees 10 and 12. However, one interviewee from the Ministry of Justice stressed that Social Finance
did not own the idea of a SIB, merely that they proposed this one.
21
Interviewees 3 and 11.
22
Interviewees 3, 7, 11 and 13.
23
Interviewees 5 and 12.
24
Interviewee 4.
25
Interviewee 1.
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Contractual relationships
developing this wider competitive market will be essential if SIBs are to be used on a larger
scale (Social Finance, 2010e).
Developing such a market for delivery agencies may have implications for the wider
commissioning landscape, since it means government contracts with intermediaries (rather
than providers), and commissions for outcomes rather than processes. In doing so, the
government delegates a role and relationship that it formerly held with service providers
through which it might be able to direct and control service delivery more closely. This was
commented on by an interviewee26 from the Ministry of Justice and the Big Lottery
Fund.27
Analytical resources
Social Finance and the Ministry of Justice described the development of this SIB – in
particular, determining the outcome measurements and payment model – as complex and
time-consuming, requiring significant resources in the development stages. This was
mentioned also by one interviewee from NOMS. For example, the analytical work and
negotiations were time-consuming for the Ministry of Justice, HM Treasury, Social
Finance and investors. The Ministry of Justice spent a considerable amount of time
ensuring that the proposition was one that the department should pursue.28 Social Finance
has estimated that it has invested approximately 2.5 person-years of its resources, and more
than 300 hours of legal advice (provided pro bono), as well as specialist tax advice, in
developing the SIB.29
All three investors with whom we spoke perceived the contracts to be complex.30 Some of
the smaller foundations shared legal advice or ‘piggybacked’ on others’ legal assessments,
while others took their cue from the fact that larger foundations (such as the Esmeé
Fairbairn Foundation) had accepted the terms of the contract:
We effectively took a common-sense approach and said, if it's good enough for Esmeé
Fairbairn, it's good enough for us – and did a light-touch due diligence.
(Interviewee 16, Investor)
Contracting with HMP Peterborough as a private prison
An additional element of the contractual processes in setting up the SIB was the existing
private finance initiative contract between the Ministry of Justice and Peterborough Prison
Management Limited, which operates and maintains HMP Peterborough (which in turn
subcontracts the operation of HMP Peterborough to Sodexo).31 The Ministry of Justice
26
Interviewee 11.
27
The contracts for the Peterborough SIB specify that any delivery agent must comply with the Ministry of
Justice’s legal duty of care towards prisoners.
28
Interviewees 3, 7, and 8.
29
Taken from a presentation given by Social Finance (Social Finance, 2010b).
30
Interviewees 16, 20 and 22.
31
Previously Kalyx.
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negotiated a no-cost amendment to the private finance initiative contract to ensure that
providers under the SIB could enter the prison, use prison premises and access prisoners in
order to deliver interventions. This amendment to the contract was signed off by
Peterborough Prison Management Limited parties.
From reading the contract between the Ministry of Justice and Social Finance, we learned
that this requires Social Finance to work with HMP Peterborough to develop the
implementation plan with the prison.
14
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Contractual relationships
Figure 1: The processes of negotiating and drafting contractual arrangements for the SIB
Source: Interviewees’ accounts analysed by RAND Europe
15
Lessons from the SIB at HMP Peterborough
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Risks under the SIB
The interviewees perceived that the contracts for the SIB at HMP Peterborough transfer financial
risk away from government and small providers and onto social investors.
Financial risk to the Ministry of Justice
The Ministry of Justice and the Big Lottery Fund will only make the outcome payments in the
event that reoffending is reduced by an agreed level (10% in each cohort or 7.5% over all three
cohorts as agreed by the stakeholders) compared to a matched comparison group. Although, as
mentioned above (in section 2.1), two interviewees from the Ministry of Justice and all the
interviewees from NOMS noted the less-than-usual scope for negotiation in this SIB contract,
because the supplier (Social Finance) had been agreed by the time that final negotiations were
undertaken. The value of the payment-per-reconviction event was perceived by some within the
Ministry of Justice to be generous, and in this sense some felt that the Ministry of Justice was
taking on some risk.
However, we note that the interviewees from the Ministry of Justice stressed that considerable
analytical effort went into assessing the suitability of the outcome metrics and payments, in order
to ensure that Ministry of Justice’s financial risk was limited, and that contractual stipulations were
put in place to ensure this was the case (for example, an overall outcome payment cap was put in
place, which is discussed further in Chapter 5). Later stages of this evaluation will include analysis
of the costs and benefits of the Peterborough SIB.
Financial risk to providers
The interviewees from the St Giles Trust did not identify any major financial risks to their
organisation: it is paid to provide its services irrespective of the outcomes. Further, because the SIB
does not account for a very large proportion of its overall activities (we were told that the SIB
contract represents about 6 or 7% of St Giles Trust’s work), the Trust did not consider itself to be
overly dependent on the success or failure of the initiative financially, at least.32
Financial risk to Social Finance
None of the participants to this part of the research commented on the benefits and risks of the
SIB arrangement to Social Finance, or to the limited partnership set up for the SIB. These
risks and benefits may encompass commercially sensitive information, which may make it difficult
to shed light on them through such research. However, these are questions that merit further
exploration in future phases of the research.
Reputational risk to all stakeholders
The SIB at HMP Peterborough has generated an enormous amount of policy and wider public
interest and media attention. This interest has been evident not only nationally but also
internationally,33 including requests for briefings from international audiences.34 Because of this
32
Interviewee 2.
33
For example, it was mentioned at an Organisation for Economic Co-operation and Development (OECD) conference
(Gurria, 2010), and in the press in Australia (see for example, Pro-Bono Australia, 2010) and the United States (see for
example, Clinton, 2010).
34
One interviewee noted that the Ministry of Justice has been requested to brief the White House on the SIB, as there is
US interest in development of the model.
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Contractual relationships
wide and intense interest, the Ministry of Justice, Social Finance, HMP Peterborough and
providers such as the St Giles Trust all bear some reputational risks:
[T]here was quite a lot of media attention around the model and ministers visiting ... it highlighted
how important it was and how many people were watching what happened.
(Interviewee 19, Deputy Director, HMP Peterborough)
St Giles Trust ... is very squarely seen as one of the key delivery agents. We’ve spent ... 50 years ...
building up a reputation that we’re a very robust service-delivery charity that makes a real impact
on clients, so it’s not so much the financial risks I’m facing, but it’s certainly reputational risk –
and therefore we’re very keen to make this work, because it’s a financing model that deserves to
thrive.
(Interviewee 2, Director, St Giles Trust)
While this has not been tested yet, one possible implication that we may draw from this is that this
reputational motivation for providers may be important in future SIBs, in which providers are not
incentivised on a payment-by-results basis.
The three investors interviewed35 did not mention any reputational risk to themselves. The
conclusion we draw from the interviews is that although investors are keen for the SIB to succeed,
they are aware that, regardless of outcome, they will have fulfilled their mission by investing in the
SIB. As indicated by this quotation, they invested to help develop and test the idea as well as to
provide interventions for offenders (investors’ motivations for investing are discussed in section
3.5):
For us, the compelling reason was the proof of concept. Because if this Social Impact Bond, as a
new financial product or asset class, can be developed, then actually significant sums of private
capital can be unlocked into investing in prevention of negative social problems.
(Interviewee 16, Investor)
2.3
Broader, non-contractual benefits to parties under the SIB
Benefits to the Ministry of Justice
One interviewee from the Ministry of Justice and one from NOMS explicitly mentioned that the
Ministry of Justice valued a potential reduction in reoffending as a result of the SIB and the
benefits this brings to the public and victims:
The benefits are that we actually do make a real difference in reoffending ... it will work with a
group of offenders which [are] identified as our biggest gap and our biggest priority to try and do
something about.
(Interviewee 1, Regional Manager for Commissioning, NOMS East)
35
Interviewees 16, 20 and 22.
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I think we all want to see how it works, and I don’t think it’s in anyone’s interest for it to fail.
That’s not what we’re about. We actually want to see huge cuts in reoffending. If we can deliver
significant reductions in reoffending in a way that we can measure, we can attribute and we can
transfer, we’d be very happy. So I think we have a huge amount of goodwill around it.
(Interviewee 7, Policy Advisor, Ministry of Justice)
Another benefit mentioned by three interviewees36 was that of testing the idea of a SIB and
informing wider roll-out of SIBs, as this quotation indicates:
So this is very important to us ... you’ll have seen the centrality of the payment-by-results proposals
to how we want the world to be a different place. I think from a lot of points of view,
Peterborough was a really, really important step forward for us.
(Interviewee 3, Senior Civil Servant, Ministry of Justice)
Beyond the benefits expressly mentioned by interviewees, we suggest that given the extent of media
coverage and interest in the pilot, the Ministry of Justice may gain beneficial profile as well as
being subject to attendant reputational risk. In agreeing to test the SIB at HMP Peterborough, the
Ministry has taken a leading role in testing alternative PBR funding mechanisms, and this has
boosted visibility and interest in its work from other departments and parts of government, both
nationally and internationally (see for example, Cabinet Office, 2010).
Benefits to providers
Social Finance reported that their intention is to fund the St Giles Trust to deliver services for five
or six years under the Peterborough SIB.37 An interviewee38 from the St Giles Trust indicated that
this is much longer than the average length of funding received by the organisation, which was 22
months at the time of interview. Short-term funding can be a barrier to continuity of service in
addressing social challenges (Disley, et al., 2009). The stable funding provided under the SIB may
be an advantage in terms of organisational sustainability and less disrupted service provision
(Clark, et al., 2009).
One interviewee from St Giles Trust mentioned the benefit that the SIB contract allows them to
deliver services (as part of a payment-by-results contract) without the risk of, or the need to, find
upfront funding:
I’m not taking the risks ... we are very fortunate to be selected as one of the delivery agents, and
therefore we get a funding stream which is stable.
(Interviewee 2, Director, St Giles Trust)
This is in line with the commitment by the Ministry of Justice, articulated in the Green Paper, to
remove barriers to smaller providers in delivering services (Ministry of Justice, 2010a, p.41).
36
Interviewees 1, 3 and 12.
37
However, Social Finance also reported that the contracts with all current providers under the Peterborough SIB are
agreed on a year-by-year basis, and only last only one year at a time. This is intended to allow space for the services
provided to be adapted if necessary to meet the needs of the target population.
38
Interviewees 2, 14 and 15.
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Contractual relationships
Benefits to investors
Investors noted that they were interested in developing an investment model that would better
align their investments and their social aims. The SIB provides a possible way for them to obtain a
‘blended return’, that is, a financial return on investment that may not be as high as their other
highest possible returns, but one which allows them to fulfil their charitable mission and invest
capital in an area that fits with their specific interests at the same time. Furthermore, testing this
funding model may allow them to obtain a return on investment while helping to foster
innovation and test a new funding model.
Benefits to HMP Peterborough
An interviewee from NOMS suggested that some of the work done in the prison as part of the SIB
could contribute positively to the outcomes on which HMP Peterborough are measured: for
example, positive interventions with offenders.39 The two interviewees from the prison did not
mention this specific contribution to their targets, but they did report a benefit to their overall
mission from hosting the SIB:
Part of our job is protecting the public, so it is nice to not just protect them by keeping them
[offenders] behind a gate and in a secure environment; it is nice to be able to protect the public
because actually we are trying to help people not offend again. So I think that is kind of the
advantage and the credit to us in being part of the project, which is not about targets and money
and everything else.
(Interviewee 19, Deputy Director, HMP Peterborough)
Ongoing monitoring and performance management of contracts
During the interviews with Social Finance, investors and representatives from NOMS, we heard
about the following arrangements for regular reporting and contact between Social Finance and
the key stakeholders.
39
•
The Ministry of Justice has regular meetings with Social Finance and will receive updates
about the intervention.
•
Similarly, the Big Lottery Fund receives updates from Social Finance.
•
There is a SIB governance/advisory group that advises Social Finance on the delivery of
the service. The advisory group includes a former chief constable, a magistrate and
individuals with financial expertise. The advisory group is independent from the Ministry
of Justice.
•
Social Finance has regular meetings with NOMS East of England representatives and the
prison Controller (who is employed by the Ministry of Justice); as well as regular joint
meetings between the Prison director, HMP Peterborough resettlement managers and St
Giles Trust staff; and multi-agency meetings with local providers. The Social Finance
Reducing Reoffending Director is a guest member of the Cambridgeshire local criminal
justice board and a member of the Safer Peterborough Community Safety Partnership.
•
Investors receive quarterly updates on progress, engagement and key activities.
Interviewee 6.
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n the Ministry of Justice, Procurement and Legal teams will monitor the contract, and make
amendments if necessary, in consultation with Social Finance. There is also a SIB Data
Management Group attended by Social Finance, representatives from Ministry of Justice
Analytical Services and Procurement, as well as by the independent assessor. This group deals with
any issues arising around collection and recording of management data and how this relates to
outcome measures or cohort definitions. This group has already agreed upon a number of
proposed contractual clarifications or amendments which aim to ensure that the contracts describe
accurately and precisely the data that will be extracted from recording systems in calculating
outcomes. The need for such a group to resolve these measurement issues, and ensure that these
arrangements are accurately reflected in the contracts, may be a learning point for future SIBs.
During the interviews we learned about the information that Social Finance aims to collect in
order to oversee the work of providers and monitor the intervention model.40 Data will be entered
into a bespoke database by staff (in the prison and the community) who are working with
offenders. This database will hold information on uptake, engagement, contact between offenders
and providers, the services to which offenders have been signposted, and so on. Social Finance’s
capacity to analyse this data and hold subcontractors to account is as yet untested, but Social
Finance has employed a Reducing Reoffending Director, part of whose role is to monitor the dayto-day operation of the intervention.
2.4
Conclusion and potential lessons for future SIBs
Based upon evidence from our interviewees at this early stage of operation of the Peterborough
SIB, we suggest the following potential lessons for future roll-out of other SIBs.
Developing a competitive market for delivery agents. It is likely that future SIBs will be
tendered, and this may require the development of a competitive market for SIB delivery agencies
or intermediaries.
SIBs appear to involve a new commissioning landscape where government has no direct
relationship with service providers. Those developing future SIBs may wish to consider the extent
to which government is willing to delegate choices to delivery agencies.
Interviewees suggested that some legal structures of the Peterborough SIB may be
transferable to future SIBs. Specialist legal and tax advice, contract models and legal
arrangements in the Peterborough SIB (for example, setting up the limited liability partnership)
might be transferable to SIBs in new policy areas.
SIBs in new policy areas will always pose new analytic challenges. Outcome metrics and
payment mechanisms are particular to the topic area of the Peterborough SIB, and will not
necessarily provide transferable lessons for future SIBs addressing other social problems.
Implementation in a private prison is not necessarily a barrier, but it may be worth
considering whether and how to align performance metrics. The Peterborough SIB is based in a
private prison: this adds another contractual relationship, but the interviewees did not believe that
the process of implementation and buy-in was more difficult because of this. Future SIBs
40
At time of interview this database was in the development stages, and was not yet ‘live’.
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Contractual relationships
implemented in private prisons may wish to ensure alignment between prison performance
indicators and the aims of the SIB.
Interviewees believed that financial and reputational risks appear to have been transferred.
The SIB at Peterborough does appear to have transferred financial risk from the Ministry of Justice
and providers to the investors. All the parties involved bear some reputational risks (and benefits)
from participation in the world’s first SIB. For providers – who are not paid by results in the
Peterborough SIB – this provides an important motivation to do well. The reputational stake of
providers might be an important element for future SIBs.
21
CHAPTER 3
3.1
Investment in the SIB
Investors and investment in the SIB at HMP Peterborough
Social Finance secured the necessary level of investment for the SIB at HMP Peterborough.
The majority of investors were charities or foundations, 41 including the Barrow Cadbury
Charitable Trust, Esmée Fairbairn Foundation, Friends Provident Foundation, The Henry
Smith Charity, Johansson Family Foundation, LankellyChase Foundation, The
Monument Trust, Panahpur Charitable Trust, Paul Hamlyn Foundation and the Tudor
Trust (Social Finance, 2010a).42
Social Finance hopes that over time a wider investor base will develop, including more
private individuals, banks and financial institutions, pension funds and corporate social
responsibility funds (Social Finance, 2010e, p. 23). Among the three investors that were
interviewed there appeared to be a strong appetite for investment among charities and
foundations, as illustrated by this quotation:
It opens the door – this is a real torchbearer for investors to invest in a new way.
(Interviewee 16, Investor)
Social Finance informed us that almost all of the investors that expressed an interest
proceeded to invest. It reported that among those that chose not to invest the decision was
because criminal justice was not within their usual field of giving, or in one case because
the investor would have been a non-charitable organisation outside the UK, which
appeared to raise legal complexities that Social Finance and the investor agreed might be
best avoided in this first SIB.43
41
Interviewees from Social Finance noted that some ‘high net-worth individuals’ also had invested in the SIB,
but they have not been identified.
42
An interviewee (13) from the Ministry of Justice explained that they did undertake some process of checking
or approving investors, so that they knew who they were and that they were ‘the right type of organisation’.
This was not mentioned by other interviewees, and did not appear to be a sticking point in this SIB.
43
We were unable to identify potential investors who chose not to invest, which would have allowed us to
explore the reasons for this.
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The SIB appears to have attracted some new funding to criminal justice
One of the aims of the SIB, as expressed by Social Finance, is to bring in new sources of
funding for public services. Social Finance told us that ‘over half the investment (by value)
and half the investors (by number) in the Peterborough SIB are either using their
endowment or investing in the UK criminal justice area for the first time’.44 There is no
evidence from our interviews to contradict this, and one of the investors we interviewed
reported that his organisation had not previously invested in criminal justice. Another
investor45 had funded the St Giles Trust previously. However, this previous funding
appears to be via a grant to the St Giles Trust, whereas it has invested in the SIB from its
endowment capital (described further in section 3.4).
In order to make an assessment as to whether this SIB, or future SIBs, displaces existing
funding from charities and foundations, it would be necessary to analyse the funding
otherwise provided by these organisations to this type of intervention both before and after
the SIB. Future SIBs may wish to monitor the additionality of funding attracted.
3.3
Structure of investment in the SIB
Social Finance told us that investors in the SIB commit investment upfront, with funds
drawn down as needed. There are also different phases of funding – new investors can be
brought on board in new funding phases. Social Finance said that this phased funding
allows it to commence interventions while continuing the capital-raising process with
investors.
3.4
Grant versus investment funding
On a continuum of funding activity, at one end are outright gifts or grants for which little
or nothing is expected in return (except usually some sort of reporting), and at the other
end are investments made on a purely commercial basis, for which a return on investment
is expected. Social investment – which is the broad ‘type’ of investment in a SIB – is
somewhere along this continuum. Social investment is distinct from a grant, in which
money is given away, in that a financial return, however small, is expected (Kingston and
Bolton, 2004, pp. 113-114).
While the majority of the investors are foundations and charitable trusts, both Social
Finance and the three investors with whom we spoke explained that different investors
invested through different channels. Some made grants, and others funded the SIB
through endowment capital (money that they would usually invest to achieve returns,
which then help to fill up the grant-making pot).46 There appeared to be an appetite
44
Personal communication with Social Finance.
45
Esmée Fairbairn Foundation. We looked at records of grants available online; for example:
http://www.esmeefairbairn.org.uk/grants2009/main.pdf, (accessed 4 February 2011), whereas it has invested in
the SIB from its endowment capital (described further in section 3.4).
46
Investors had a choice of investing directly in the limited partnership or via a corporate feeder vehicle. The
feeder vehicle was set up to enable UK charitable investors to receive any outcome payments as donations.
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Investment in the SIB
among the investors to use mission-aligned investing rather than making a grant, as
expressed by this investor:
We have a long running interest in social investment ... the idea of not only making grants
to charities we invested in, but actually investing in them with loans or other forms of
equity.
(Interviewee 22, Investor)
However, this investor could see a case for investing in the Peterborough SIB through
either of these channels:
Although this is very firmly an investment for us on the social investment side, I could put
it up to the Trustees and ... I would have recommended a ... grant, because it’s a strong
proposition.
(Interviewee 22, Investor)
3.5
Reasons for investing in the SIB
Making the most of networks and contacts to secure investment
According to Social Finance and all three investors with whom we spoke, Social Finance
approached some investors at an early stage while the idea of a SIB was still in
development,47 and in parallel with negotiations with the Ministry of Justice. This early
contact and testing the possible funding waters appears to have been important, as Social
Finance needed some confidence that it could raise sufficient investment if the Ministry of
Justice agreed to go ahead with the SIB.48
Social Finance described (and this was corroborated by an investor) how it secured
investment from a few key foundations which drew upon their networks of funders
interested in criminal justice to invite others to meet Social Finance and hear about the
proposed SIB.49 One of the investors heard about the SIB at a conference for social
entrepreneurs.50 Some of the larger foundations offered to provide enough funding to
implement the SIB if other investors could not be found, but also agreed to scale back their
investment if others came forward, in order to allow Social Finance to broaden out the
investor group.
All three investors reported that they saw Social Finance as a trusted partner:
Social Finance knew what they were doing; they've gone about it in the right way. They
have engaged with the right partners and we have every reasonable confidence that they
would succeed.
(Interviewee 16, Investor)
47
Interviewee 20.
48
Interviewee 4.
49
Interviewee 20.
50
Interviewee 16.
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There were existing relationships between Social Finance and some of the investors and,
as mentioned above, one of the investors (Esmée Fairbairn Foundation) had funded the
St Giles Trust previously. Another investor with whom we spoke met with St Giles Trust
to ensure due diligence in their investment in the SIB, and had worked previously with the
YMCA (another provider at Peterborough).51
From these comments, we suggest that the successful pulling together of many of the
partners and funding for this SIB appears to have been associated with existing
relationships, track record and trust between some of the partners.
What made the SIB an investment that was attractive to investors?
During the interviews with three investors, the following reasons were given for their
decisions to invest in the SIB at Peterborough.52
3.6
•
The desire to support development of the SIB as a new kind of payment-by-results
financial product or asset class – they were attracted by its potential to improve the
criminal justice system and its application to other areas, thus to benefit the public
and society.
•
Charities’ desire to invest money more ethically and in ways that were more
aligned with their missions.
•
Interest from some (but not all) investors in funding programmes in the area of
criminal justice to improve outcomes for offenders. They had confidence in
provider organisations (St Giles Trust) and the staff hired by Social Finance
(reducing reoffending director) to do this.
•
The opportunity to learn about social investment was welcomed.
•
The idea of delivering upfront funding to providers was attractive.
•
An estimation by investors that there was a good chance of receiving a return on
their investment.
Securing investment in future SIBs
While we understand from the interviews that sufficient funding for this SIB was secured
in a timely manner, a number of possible issues were raised in relation to securing
investment in future SIBs or similar payment-by-results models, which merit some
elaboration in the following sections.
Building information about a new asset class
Investors typically like three things: track record, track record and track record. And this
[the SIB] is new. It's never been done before, and investors just don't do new things
(Interviewee 16, Investor)
51
Interviewee 16.
52
Interviewees 16, 20 and 22. Not all reasons were given by all investors.
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Investment in the SIB
It is really tricky – you look at it [the SIB] and go, ‘Is this an asset class?’ No. ‘What’s the
track record?’ No. ‘Have you ever done this before?’ No. ‘Has anybody ever done this
before?’ Not quite like this, no.
(Interviewee 22, Investor)
The available grey literature on SIBs (Mulgan, et al., 2010; Social Finance, 2010e, p. 45)
as well as our interviews with Social Finance and investors highlight that the SIB is a new
kind of financial product lacking a track record that investors can use to estimate their
likely return on investment.
Social Finance informed us during our interview (and this aim is echoed in publications
(Social Finance 2010e)) that it hopes that this SIB will start to build a track record in
delivering social outcomes to generate a financial return, and that the SIB will begin the
process of increasing investors’ understanding and ability to assess outcome risk:
The risks that [investors] are taking are so immeasurable ... that you’re only going to be
getting [investment] from people who are interested in the social value ... Over time we’re
building this track record for this investor base, so that you can broaden it.
(Interviewee 4, Director, Social Finance)
Similarly, this quotation from an investor highlights the unknown risk in SIBs:
I don't think that the financial return is sufficient to reflect the risk, because it's new
(Interviewee 16, Investor)
Social Finance hope that, as with other products, the cost of capital should decline over
time as investors and markets get more comfortable with what outcomes are achievable, in
which areas, and by and for whom.
Measuring social return and weighing it against risk
Although the idea of social investment is not new, the ability of investors and markets to
deal in (social) outcomes risk is currently underdeveloped (Nicholls and Pharoah, 2008):
few agreed that metrics exist for quantifying social outcomes, whether positive or negative;
conventional finance markets do not price social value creation; and consequently, there is
a lack of comparable performance information (metrics) to support the creation of a new
or modified social investment marketplace. One investor who participated in this research
noted that when assessing the sufficiency of proposed return, accounting for social return
on investment is difficult.53 However, the decision to invest in this SIB described a fairly
straightforward decision-making process:
We looked at this and we thought, are we likely to get our money back? We took the
judgement that we were. We said, ‘Is there a compelling reason to do this from a social
perspective?’ For us, the compelling reason was the [provision of] proof of concept.
(Interviewee 16, Investor)
53
Interviewee 16.
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However, this investor added that even if they did not receive a return, the worst-case
scenario was that they had supported the delivery of quality services for offenders.54
No secondary market for social investments
Tied to the fact that the SIB is a new asset class, the interviewees from Social Finance
pointed out that there is not yet a secondary market that would allow investors to sell on
their investment. An investor also made this point:
Well, again, liquidity is a bit of an issue because it is essentially a seven or eight-year
product. Now, from there in terms of tying up the funds ... it means we can't do other
things with those funds during that time. Which is why we are very interested [in] ... a
secondary market, so some sort of social stock exchange.
(Interviewee 16, Investor)
Resolving trustees’ duty to maximise financial return with accepting a blended return
One investor55 reported concerns that undertaking social investment (and accepting a
blended return) may conflict with their fiduciary obligations as trustees of charities to
maximise return on investment. When we asked Social Finance about such concerns, it
suggested that these stem from a lack of clarity in current charity investment guidance.56
Currently, the Charity Commission is consulting on a draft revision of the Charity
Investment Guidance (CC14).
Interviewees from Social Finance were of the view that foundations are building expertise
in the area of social investment: some are using financial advisers, and some financial
advisers are developing specific expertise in this area, all of which is part of the developing
marketplace for investing in social outcomes.
Tax incentives to mission-aligned and social impact investing
All three investor interviewees mentioned that tax rules may provide a barrier to charities
that wish to invest from their endowment (i.e. mission-aligned investing), rather than by
giving a grant.
We asked Social Finance how this had been dealt with: they told us that in the
Peterborough SIB, charities can receive outcome payments as donations by investing
through a charity feeder instrument (which was set up by Social Finance in this SIB).
54
This investor added that the SIB would not have been eligible for a grant from their foundation, which did
not usually grant in the area of offender rehabilitation.
55
Interviewee 16.
56
Social Finance provided the following explanation of the legal position: legally (according to the Trustees Act
2000), trustees are required to consider whether a particular investment type is suitable to their organisation's
needs (including considerations of the need for capital growth and income), whether a specific investment is a
good example of that kind of investment, and whether their investment portfolio is suitably diversified. None
of this should be prohibitive to social investment, as it is left to the trustees’ discretion as to whether their
charitable aims will be best furthered through grants or investment. To the extent to which case law is cited as
supporting the need to maximise financial return (e.g. Harries v. The Church Commissioners for England [1992]
1 WLR 1241), current examples have limited applicability to most charities as they are drawn from judgments
around pension funds rather than endowments or accumulated assets.
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Investment in the SIB
However, one investor57 said that this creates another layer of bureaucracy and involves
additional contractual and governance arrangements.
Might the government have a role in developing a market?
While the potential for the government to act to develop the market was not something
that commonly arose in our interviews, one interviewee from the Ministry of Justice
recognised that:
It is in the interest of the Ministry of Justice and other government departments that the
commissioning landscape is right for the SIB model to work; for example, that providers
of different sizes might play a role, etc.
(Interviewee 7, Policy Advisor, Ministry of Justice)
In its publications, Social Finance has identified some things that government could do to
encourage the development of a market and investment: for example, providing investment
incentives such as through taxation rules conducive to such investments (Social Finance,
2010d).
3.7
Summary and lessons for future SIBs
Based upon the evidence from our interviewees at this early stage of operation of the
Peterborough SIB, we suggest the following potential lessons for future roll-out of other
SIBs.
Social Finance appear to have attracted some new investment for the SIB at HMP
Peterborough. Future SIBs in offender management or other policy areas may wish to
monitor the additionality of funding attracted.
Trust in Social Finance and the providers, the desire to support an innovative,
emerging funding mechanism, and alignment with a criminal justice mission,
attracted investors to the Peterborough SIB. It may be helpful for future SIBs to
consider how they might also tie into the motivations, existing networks and relationships
of core funders in a given issue area.
It may be necessary for a social investment market to develop further to attract a
greater number and wider range of investors. Investment in future SIBs may be more
likely, once a track record is developed in SIBs as an asset class. Once this has occurred,
investors will have better information about investing in outcomes, and can begin to make
more informed assessments about the value and appropriate level of blended returns.
There appeared to be an appetite for mission-aligned investing among the charitable
organisations interviewed for this report. This might be developed further if trustees’
fiduciary duties can be clarified. In addition, there may be scope for tax incentives for
investing in future SIBs
57
Interviewee 22.
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CHAPTER 4
4.1
Outcome measures
Reconviction events: the outcome measure
In the SIB at Peterborough the outcome being measured is reconviction events – a proxy
measure for reoffending.58 A reconviction event is defined as an occasion on which an
offender is convicted in court for a new offence or offences.
The mean number of reconviction events for those discharged from HMP Peterborough
from a sentence of 12 months or less is compared to the mean number of reconviction
events in a matched comparison group. The mean number of reconviction events in the
Peterborough group is then subtracted from the mean number of reconviction events in
the matched, non-SIB group, to calculate the difference.
The SIB outcome measure includes reconviction events that relate to offences committed
during the 12 months after a prisoner is discharged from custody59. The data for this
measure are drawn from the Ministry of Justice extract of the Police National Computer.60
Reconviction events will be measured in three cohorts of offenders. Each cohort will
include approximately 1,000 men61 discharged from short prison sentences at HMP
Peterborough.
There are two targets for reducing reconviction events, which can result in an outcome
payment to investors if they are reached.
1. A reduction of 10% in each cohort (from the baseline generated by the matched
comparison group) – for a cohort of 1,000 prisoners, this is the level of reduction
likely to be required to produce a statistically significant difference from the
58
Reconviction is a proxy measure for reoffending. Reconviction is the last step in a criminal justice process, in
which there are high rates of attrition: an actual offence must be reported to the police, recorded by the police,
a suspect must be detected, a criminal prosecution be taken against them and a conviction secured at court.
Thus reconviction is likely to underestimate the actual number of reoffences. However, interviewees from the
Ministry of Justice pointed out that frequency of reconviction events provides a useful measure, because it is
likely to have a close relationship with costs to the criminal justice system
59
The reconviction event itself must occur within 18 months of release in order for it to be counted.
60
There are currently six different measures of reoffending, but in response to a Ministry of Justice
consultation on improvements in Statistics this will reduce to one measure of reoffending at national and local
levels that is clear to the public (Ministry of Justice, 2010b).
61
The first cohort will close after the SIB has been in operation for two years, or when 1,000 offenders have
been discharged, whichever happens first.
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control group.62 Therefore, a reduction of this magnitude with this sample size
indicates that the Ministry of Justice can be reasonably confident that the
reduction has not just been achieved by chance, and reduces the risk that the
Ministry of Justice is paying for an outcome that may not have been caused by the
SIB intervention. A minimum of 10% reduction for each cohort needs to be
achieved in order for investors to receive outcome payments for each cohort.
2. If a 10% reduction in reconviction events is not detected for any of the three
cohorts, at the end of the entire SIB period, the three cohorts will be evaluated
together. If a reduction in conviction events of 7.5% or more is detected across all
3,000 offenders, when measured against a matched comparison group, investors
will be paid an agreed fixed sum per reduced reconviction event. The 7.5% was
calculated as the level of reduction likely to be required to reach statistical
significance for a total sample of 3,000 prisoners.
We were told by interviewees from the Ministry of Justice, NOMS63 and Social Finance
that these reduction targets were arrived at following detailed work by the Ministry of
Justice analytical team. The process described to us appears to have been iterative, with
considerations and the interests of different groups weighed up:
It was a new process – we hadn’t done it before. How [do] you define what the [sic]
payments should be made on, the timescale of that payment, the number of people in the
cohort that you have, and then how you test that against a control group?
(Interviewee 13, Procurement, Ministry of Justice)
When you’re trying to develop what the outcome measures ought to be, the question is:
what measures will incentivise the behaviour that you want, rather than what measures
capture entire truth and are perfect? Because the latter is usually impossible.
(Interviewee 4, Director, Social Finance)
4.2
The Peterborough cohorts
During the life of the Peterborough SIB there will be three cohorts of approximately 1,000
men. The offenders who are eligible to be part of the contract are males who are:
•
at least 18 years of age at the time of sentencing; and
•
sentenced for a consecutive period of less than 365 days; and
•
discharged from HMP Peterborough after serving the sentence referred to above
(or any part thereof64) at HMP Peterborough.
62
These calculations were based on historical data on the mean frequencies of reconviction events for shortsentenced prisoners discharged from HMP Peterborough, using a 90% level of statistical significance with a
power of 80% and a 1:10 matched control group.
63
Interviewee 1.
64
Prisoners who serve the whole of their sentence on remand and are discharged from Peterborough on the day
that they receive their sentence will not be included in the cohort.
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Outcome measures
A prisoner will be counted as a member of the cohort whether or not they engage with the
SIB-funded services. The inclusion of those who do not engage in the intervention
removes any incentive for the service provider to ‘cherry-pick’ the easiest offenders with
whom to work, as this interviewee from NOMS commented:
I was always very clear in my mind that we had to have the whole cohort of people being
released from Peterborough prison as the cohort, rather than just people that they’d
intervened with, because the alternative is that you get ... distortions by just having the
people they actually engage with, [and] because you clearly would be dealing with the
group who were the easiest to engage with.
(Interviewee 1, Regional Manager for Commissioning, NOMS East)
Although this was not raised by interviewees, there might be an incentive to ‘cherry-pick’
an area or a prison if SIBs were rolled out more widely. For example, prisons with strong
inspection reports or better facilities might be more attractive targets for intermediaries and
investors, in the hope that outcomes would be easier to achieve with offenders discharged
from those establishments. Robust approaches to measuring the counterfactual may be able
to overcome this risk.
4.3
Stakeholder views on using frequency of reconviction
When asked, the interviewees mentioned the following advantages to the selected outcome
measure, which is perceived by them as:
•
a clear, single metric;
•
a metric that is already measured and for which good data is available;
•
a measure that helps to prevent ‘cherry-picking’65 – compared to a more simple
yes/no reconviction measure, which could introduce an incentive to focus on those
least likely to reoffend at all; and
•
a measure that has the most direct link to costs.
One interviewee from NOMS66 saw this outcome measure as only one of several options
for measuring rehabilitation outcomes for offenders, but one which represented a sensible
and pragmatic choice for this pilot. Another interviewee from HMP Peterborough called it
‘realistic’.67 Another representative from NOMS said that no one had come up with
anything better yet. The interviewees from Social Finance had a similar view:
It was a balance between operational feasibility and measurement because ... we had
originally looked at ... short-sentence prisoners being discharged to Cambridgeshire. The
65
An alternative way to ensure that the outcome measure does not encourage ‘cherry-picking’, as suggested by
Social Finance, would be to introduce an escalator into the value of the outcome payment: the per-person
payments would increase with the proportion of offenders who have not been reconvicted (Social Finance,
2009, p. 6).
66
Interviewee 12.
67
Interviewee 18.
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trouble was that population was too small to be statistically significant, and so it was a
back and forth of changing the cohort terms and definition to be statistically significant,
but then also assessing the operational feasibility of whether we could make that work,
what the cost of delivering that would be.
(Interviewee 5, Director, Social Finance)
4.4
The control group
The offenders in the three Peterborough cohorts will be compared to matched control
groups. Each control group will be drawn from all prisoners released from sentences of less
than 12 months, within the same time period from other prisons nationally. One-to-many
propensity score-matching will be used to select the control group: this means that each
cohort prisoner will be matched to up to 10 control group prisoners. According to an
interviewee from the Ministry of Justice, the strength of using propensity score-matching
(PSM) as an approach to building the control group is that it allows the assessor to control
for different characteristics of the offenders.68, 69
The independent assessor
The Ministry of Justice has appointed an independent assessor through a competitive
tendering exercise. The independent assessor will identify the comparison group70 and
compare reconviction events between the experimental and control groups on the basis of
data from the Police National Computer. One interviewee from the Ministry of Justice
mentioned that in future SIBs, the National Statistic measure of reoffending may be used
rather than an independent assessor.71 Other interviewees did not comment on the
desirability or value-added of an independent assessor, or whether an independent assessor
would be used in future SIBs.
Statistical significance
The Ministry of Justice analytical team sought to ensure that the outcome payment will be
made only if the reduction in reoffending is statistically significant,72 that is, if the
reduction is large enough to provide confidence that it is significantly more likely to be due
to the intervention, rather than to chance.73
68
Interviewee 8.
69
The contract between the Ministry of Justice and Social Finance specifies a number of explanatory variables
to be considered for inclusion in the PSM model: age; nationality; ethnicity; current offence characteristics (e.g.
type of offence, discharge date and length of sentence); offending history (e.g. number of previous convictions,
age at first sentence and length of criminal career).
70
The independent assessor will make a decision on the final variables to be included in the propensity scorematching (PSM), and the need for assessing interactions and non-linear effects upon data investigation in the
final PSM model. The contract between the Ministry of Justice and Social Finance specifies that only
statistically significant explanatory variables will be built into the final PSM model.
71
Interviewee 13.
72
Interviewee 8.
73
The analysis of the cohort size needed to show a statistically significant reduction in reconviction events of
10% is based upon historical Ministry of Justice data on the mean frequencies of reconviction events for shortsentenced offenders discharged from HMP Peterborough. The actual cohort size needed to ensure statistical
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Outcome measures
The size of the cohort is central to ensuring statistically significant results, and this
consideration to deciding where to conduct the SIB. For example, conducting the SIB in
several prisons to get greater numbers of offenders leaving prison could have been
desirable, as this would have meant a larger cohort (or at least, that the cohort would fill up
more quickly). However, there was also consideration of the need to keep the level of
upfront funding74 and outcome payments achievable: the more offenders, the more
funding would be needed from investors to deliver the interventions, which would have to
be reflected in the size of the potential outcome payment.
Other ways of measuring and attributing outcomes
Another approach to measuring outcomes generated by a SIB, which was mentioned by
one interviewee at the Ministry of Justice,75 would be running a randomised control trial.
This would entail comparing the outcomes of some offenders leaving HMP Peterborough
and receiving the SIB intervention, with the outcomes of a matched group of offenders
leaving HMP Peterborough who did not receive the intervention.
This interviewee at the Ministry of Justice told us that there had been careful consideration
about whether the Peterborough SIB should be tested using a randomised control trial.
This approach would have the advantage of making causality more certain, because the
control group would be subject to the same or similar economic and social conditions in
Peterborough as the intervention group. The matched comparison group will experience a
range of different social and economic environments, depending on which communities
they are released into and the opportunities that exist for them there. According to an
interviewee from the Ministry of Justice Analytical Services, the main reason that a
randomised control trial was not undertaken was that there was no appetite for a situation
where offenders who volunteered or were eligible for SIB-funded programmes would have
to be kept out of the programme in order to serve as the control group.
The same interviewee from the Ministry of Justice Analytical Services reported some
residual uncertainty about whether the correct balance was struck in the SIB: perhaps
whether a much simpler measurement mechanism would have sufficed, or in fact a much
more rigorous testing of outcomes was needed.76 An interviewee from NOMS77 also
mentioned that it was not yet clear whether the measure was right.
significance will not be known until data is collected on the Peterborough cohorts, and the mean frequency of
reconviction events is known. The cohort size was selected by Ministry of Justice analysts as being likely to be
statistically significant, and therefore limiting the risk of a false-positive result to the Ministry of Justice, that a
reduction of reoffending is detected in the cohort which is not due to the SIB-funded interventions. It also
balances the risk to Social Finance and investors of a false-negative result: that no reduction in reconviction
events is detected when in fact the interventions were effective.
74
Interviewee 8.
75
Interviewee 8.
76
One way in which differences between the control group approach and a randomised approach could have
been explored would have been to implement both, and to compare the findings of the two measures. This is
no longer possible, since all short-sentenced prisoners discharged from HMP Peterborough are included in the
intervention cohort; none have been randomised into a control group.
77
Interviewee 1.
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Lessons from the SIB at HMP Peterborough
4.5
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Attribution issues if SIBs or other PBR initiates are rolled out more widely
There is a possibility that wider roll-out of SIBs or other PBR pilots may create a situation
where service users are the beneficiaries of several different services funded by separate
SIBs. This might cause problems in identifying which SIB- or PBR-funded service caused
an outcome. The possibility of SIB-funded services overlapping (geographically and with a
particular client base) might be one factor to take into consideration in selecting which
SIB-funded interventions to implement where and with whom. There is a risk that
government and others involved in payouts could be asked to ‘pay twice’ for the same
outcomes.
4.6
Summary: conclusions and potential lessons for future SIBs
Based upon evidence from our interviewees at this early stage of operation of the
Peterborough SIB, we suggest the following potential lessons for future roll-out of other
SIBs.
The development of a methodologically robust outcome measure, which had the
confidence of all stakeholders, was a time-consuming and analytically complex
process in the Peterborough SIB. An outcome measure will be central to all future SIBs
and other forms of payment by results. There may be transferable lessons from the
Peterborough SIB to future SIBs in offender management and other PBR arrangements in
the field of offender management. However, detailed questions regarding control groups
and statistical significance will have to be analysed for each new issue area or intended
outcome, taking into account the nature of the target population and the desired
outcomes. Future SIBs in new policy areas, and payment-by-results arrangements in new
policy areas, should anticipate the time, skills and capacities that are likely to be needed
from both intermediaries and government to develop outcome measures.
In the Peterborough SIB, stakeholders reported that they tried to balance the need for
the outcome measures to be robust with considerations of the time, resources and data
needed to operationalise the measure. The SIB at HMP Peterborough used a matched
control group, but reportedly other options were considered by the Ministry of Justice –
including a randomised control trial. This may have been more time-consuming and costly
to operationalise, but may have provided a more robust causal attribution. Future SIBs and
PBR arrangements may have to make similar trade-offs.
36
CHAPTER 5
Outcome payments
If reconviction events are reduced by 10% or more in cohorts 1, 2 and/or 3, investors will
receive an outcome payment. If a 10% reduction in conviction events has not been
detected for any of the three cohorts at the end of the entire SIB period, the three cohorts
will be evaluated together. If a 7.5% reduction in conviction events is detected, investors
will receive an outcome payment.
Our understanding of the financial processes in the SIB, drawn from our interviews, is set
out in a process map in Figure 2.
The value of the outcome payment is determined by two elements:
1. an (undisclosed) value for each reduced reconviction event – negotiated and
agreed between Social Finance and the Ministry of Justice; and
2. the number of reduced reconviction events – based on the difference in mean
reconviction events between the Peterborough cohort and the comparison group.
The Ministry of Justice has placed a cap on the outcome payments, ensuring that its
liability is limited: once the reduction in reconviction events reaches the specified absolute
cap in terms of pounds, the outcome payment will not increase.
5.1
Expected return on investment and time lag until payments
Social Finance indicated that if reconviction events are reduced by 10% in one or more
individual cohorts, investors are expecting an annual internal rate of return of around
7.5% (up to a maximum of around 13%, depending on the scale of the reduction in
reconviction events).
Under this payment model, investors can expect their first outcome payment to be made
approximately three to four years after their initial investment, providing the SIB achieves
its target of reducing reconviction events by at least 10% for cohort 1. This lag is due to a
number of factors. It is likely to take almost two years to recruit a cohort of 1,000 unique
offenders discharged from HMP Peterborough, based on current discharge rates.78 The
reoffending of these prisoners is then assessed over a one-year period following their
78
The cohort will last a maximum of two years regardless of the number of unique offenders recruited by that
time. The cohort will close earlier if 1,000 offenders are discharged from HMP Peterborough in less than two
years.
37
Lessons from the SIB at HMP Peterborough
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discharge from prison, allowing a further six months after this for any outstanding
reconviction events relating to offences committed within this follow-up year to be
processed by the courts. A further three months is then set aside for the Ministry of Justice
to receive an updated extract of the Police National Computer. Finally, a one-month
period is allowed for the independent assessor to undertake the reconviction analysis and
calculate any outcome payments.
Social Finance interviewees thought that the length of time until the outcome payments in
this SIB is around the maximum length of time investors may be willing to wait for a
return, especially if there is no secondary market that would allow them to sell on their
stake in the SIB and achieve liquidity if necessary or desired (Social Finance, 2010e).
Social Finance described a trade-off between the length of time until first payment and the
amount of capital needed upfront from investors. If outcomes are achieved within a shorter
period of time, some of the outcome payments to investors can be reinvested by those
investors as their next investment contribution. We note that the desire for quicker returns
may encourage a focus on shorter-term outcomes rather than long-term outcomes from
preventative interventions.
Social Finance also highlighted that there is a balance to be achieved between the length of
time until first outcome payment and the sample size needed to show statistical
significance. If this SIB was on a larger scale, with more offenders in the cohort, a
sufficiently large sample size would be expected to be achieved more quickly, and therefore
improved outcomes could have been demonstrated sooner – and if they were, then
payments could be made sooner. The length of time until outcome payments may shape
investment in the SIB, as not all investors can wait for that length of time for the
possibility of a return on their investment.
5.2
Funding outcome payments
The outcome payments will be made by the Ministry of Justice and the Big Lottery Fund.
As described to us by an interviewee from the Fund, its decision to part-fund the outcome
payments was made on the basis that the SIB was innovative, and would be funding
something not already provided by government, thereby fitting with its principle of
additionality – that is, supporting the pursuit of new or additional outcomes.79
5.3
Pricing reconviction costs and savings and negotiating the tariff
As with determining the methodology for measuring reduced reconviction events, the
Ministry of Justice undertook detailed analytical work to support the value assigned to
each reduced reconviction event. An interviewee80 from the Ministry of Justice said that
the analysis drew on existing data about the costs incurred at different stages of the
criminal justice system, and noted that the cost calculations took into account the broader
79
In addition, the Big Lottery Fund is separately funding Social Finance to develop the SIB model in other
policy areas.
80
Interviewee 7.
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Outcome payments
societal benefits of reduced reoffending. Since then there has been further work undertaken
within the Ministry of Justice to further refine the understanding of costs in order to
inform future PBR initiatives.
Interviewees from the Ministry of Justice81 and NOMS82 described a considerable process
of negotiation over the value of the ‘tariff’ for a reduced reconviction event, taking into
account the analytical work carried out by the Ministry of Justice and the acceptable level
of return on investment for Social Finance and investors. We were told that the agreed
tariff and business case for the SIB was signed-off by HM Treasury as representing value
for money for government.
5.4
Accounting for outcome payments
The issue of the accounting rules which applied to the SIB was raised by interviewees from
Social Finance, the Ministry of Justice and HM Treasury.
The investors’ funds within Social Impact Partnership Limited,83 used to fund the
interventions, do not count as government debt. The outcomes risk and control of the
funds lie solely with Social Impact Partnership Limited, and this accounting treatment was
approved by HM Treasury. The possibility of making outcome payments may be disclosed
as a contingent liability in the Ministry of Justice accounts, if such treatment becomes
appropriate. After the three cohorts have been followed up, the Ministry of Justice will
know whether or not it will be making the outcome payments, and can adjust its
accounting accordingly.84
From our interview with a representative from HM Treasury,85 we understand that it is
not decided whether this would be the case with future SIBs implemented on a larger scale.
5.5
Summary: conclusions and potential lessons for future SIBs
Based upon evidence from our interviewees at this early stage of operation of the
Peterborough SIB, we suggest the following potential lessons for future roll-out of other
SIBs.
Developing the payment model for the Peterborough SIB demanded considerable
analytical time and resources from the Ministry of Justice and Social Finance. The
measure was based, at least in part, upon Ministry of Justice estimates of the cost of a
reconviction event – including direct costs to the criminal justice system and social costs of
crime – since this was the foundation of ensuring that the Peterborough SIB represents
value for money for the government. Those developing new SIBs and other payment-by-
81
Interviewee 11.
82
Interviewee 1.
83
Social Impact Partnership Limited is the vehicle set up by Social Finance to hold the debt.
84
This statement was approved by accountants in the Ministry of Justice.
85
Interviewee 10.
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Lessons from the SIB at HMP Peterborough
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results mechanisms may wish to consider the extent to which equally – if not more –
robust cost data are available or can be developed.
The length of time until the outcome payment has some implications for the
Peterborough SIB. Those developing future SIBs or PBR mechanisms may wish to bear
these implications in mind. For example, it may limit investment to those who can afford
to tie up capital for that amount of time. Capital can be used more efficiently if outcome
payments are made sooner, since some of the outcome payments can be reinvested to pay
for service delivery: this means that less upfront funding is needed.
40
RAND Europe
Outcome payments
Figure 1 Process map of financial processes in the Peterborough SIB
Source: Interviewees’ accounts analysed by RAND Europe
41
CHAPTER 6
The intervention and uptake so far
The services delivered under the SIB are referred to as the ‘One Service’, providing ‘early
engagement, through and beyond the gate delivery and proactive, individualised support in the
community to address needs and prevent reoffending’.86 As the interviewees from all the
stakeholder groups emphasised, the innovations of the SIB at Peterborough are the provision of
services to short-sentenced offenders at HMP Peterborough (who would not otherwise receive
supervision by the Probation Service on release from prison) and the funding arrangements,
rather than the particular intervention with offenders: one-to-one, individualised support
addressing offenders’ needs has long been recognised as a potentially successful model for
reducing reoffending, and has been provided by various organisations for some time.
At the early stage in the SIB at HMP Peterborough when our research interviews were
conducted, two service providers had been commissioned by Social Finance to work with
members of the Peterborough cohort and their families. The St Giles Trust had been
commissioned by Social Finance to provide a through-the-gate service to the Peterborough
cohort of offenders. The St Giles Trust was previously commissioned by the London Probation
Service (as well as in other locations across the country) to deliver its Through-The-Gate
intervention.87 Secondly, the children’s charity Ormiston Children’s & Families Trust had been
commissioned by Social Finance to provide support to the families of offenders – helping them
to prepare for, and understand the process around, an offender’s release from prison.88 Ormiston
Children’s & Families Trust has been working in and around Peterborough for a number of
years, and has previously provided prison-based services to families of offenders. More
information on the services provided by St Giles Trust and Ormiston Children’s & Families
Trust is provided in Appendix C.
Social Finance’s long-term vision for the SIB is to extend the range of services and service
providers to ensure that a range of identified offender needs can be addressed.89 This might be
done on a spot-purchasing basis – buying services specifically on a one-off basis for a single
offender or group of offenders – or by commissioning providers on a more long-term basis.
86
Description provided by the One Service website: http://www.onesib.org/#/about-one/4542508807, accessed 31
January 2011.
87
Interviewees 14 and 15. See also the description in Pro Bono Economics (2010).
88
This description of the work of Ormiston Children’s and Families Trust was provided by Social Finance.
89
Interviewee 17.
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The intervention and uptake so far
Social Finance confirmed that St Giles Trust is likely to remain a core provider of through-thegate interventions with offenders.
In addition to commissioning services, interviewees from Social Finance were interested in
opportunities to work with existing service providers in the community, perhaps finding
additional, external funding to support some interventions.
6.1
Nature of the cohort as at March 2011
On 16 March 2011 there were approximately 315 offenders in the Peterborough cohort.90 To get
a sense of the characteristics of the Peterborough cohort, and how typical they are of shortsentenced prisoners nationally, we compared the ethnicity and age of the Peterborough cohort
with offenders aged 21 or over discharged nationally from short sentences in the first quarter of
2008 (i.e. the latest published data).
At the time of writing this report, data were not available as to the previous criminal history of
the cohort, but this will be available for later stages of the evaluation.
The small numbers in the Peterborough cohort mean that we must be cautious in drawing
conclusions from this data; however, as shown in Figure 3 and Figure 4, the age profile and
ethnicity breakdown of the two groups is broadly similar (see Table D-1 and Table D-2 in
Appendix D).
Figure 2 Breakdown of offenders by age band – Peterborough cohort compared to national sample
50%
Peterborough discharges
45%
Q1 2008 data
40%
35%
30%
25%
20%
15%
10%
5%
0%
21-24
25-34
35-44
45+
Age band
Does not include one member of the Peterborough cohort whose age was not known (no release date was recorded for
this individual, so age on release could not be calculated)
Source: Ministry of Justice extract of the Police National Computer
90
Of this 315, the personal details of four members of the cohort could not be matched to details on the Ministry of
Justice extract of the Police National Computer.
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Lessons from the SIB at HMP Peterborough
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Figure 3 Breakdown of offenders by ethnicity – Peterborough cohort compared to national sample
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Peterborough discharges
Q1 2008 data
White
Black
Asian
Other
Ethnicity
Does not include four members of the Peterborough cohort whose personal details could not be matched with the
details of offenders in the Police National Computer data held by the Ministry of Justice, and two members of the
cohort whose ethnicity was not known
Source: Ministry of Justice extract of the Police National Computer
6.2
Uptake and engagement with the One Service
Information as to the level of engagement by offenders in the One Service was only available for
the 135 offenders who were in the Peterborough cohort as at 30 November 2010. Of these, St
Giles Trust staff defined 70% as being ‘engaged’ with the service. Information about the
numbers defined as engaged or not engaged as at March 2011 was not available at the time of
writing, but Social Finance are recording this information and it will be used in later stages of the
evaluation.
6.3
Facilitation of the SIB by HMP Peterborough
Interviewees from HMP Peterborough noted Sodexo’s willingness to host the SIB pilot:
Through-the-gate care meeting offenders, following that through, being there to support them,
that is the right thing to do. It is what I think anybody working in the prison would want to do
... that is why Kalyx91 wanted to be involved, because they recognised that that was the right
thing to do.
(Interviewee 19, Deputy Director, HMP Peterborough)
HMP Peterborough appears to have taken several steps to accommodate and facilitate the SIB.
One of the most significant is that HMP Peterborough has employed a pre-release or
resettlement team to facilitate the SIB, consisting of a manager, a support worker and an
91
The prison operating company has since changed its name to Sodexo.
44
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The intervention and uptake so far
administrative post. This team has been funded by Sodexo, not Social Finance.92 This team
works with all members of the population at Peterborough, but the trigger for their employment
was the implementation of the SIB, and the current prison management told us that this team
was key to facilitating the day-to-day operation of SIB-funded interventions within the prison.
Further to employing these additional staff members, HMP Peterborough has ensured internal
procedures and processes to accommodate the SIB. This includes allowing ex-offenders to reenter the prison in their role as St Giles Trust volunteers, linking the SIB provision with existing
advice and support.
6.4
Knock-on benefits of hosting the SIB pilot
Overall, HMP Peterborough’s involvement in the SIB was perceived by the director and deputy
director as positive for the prison, both internally and externally. Internally, interviewees from
the prison mentioned the following benefits:
6.5
•
through-the-gate contact with offenders allows the prison to get some feedback and
information about the effectiveness of the services and pre-release advice that it provides
to offenders, which allows those services to be improved;
•
provision for short-sentenced offenders under the SIB has freed capacity within existing
prison staff and resources to work with other elements of the population;
•
the prison is looking to transfer learning from the interventions with offenders funded
by the SIB to other elements of the population (for example, short-sentenced women
offenders).
Effect of the SIB on other organisations in the area
Interviewees from the prison, Social Finance and NOMS all noted that there were some concerns
among existing service providers in Peterborough at the prospect of SIB-funded providers
starting work in the area. At a time of limited funding for service provision, there was
understandable concern about the effects of a new service provider. However, these concerns
appear to have been addressed through a significant amount of brokerage and relationshipbuilding by Social Finance, NOMS and HMP Peterborough:
We did have a fairly well-defined group of people working with offenders from the third sector
... There was quite a lot of anxiety about ‘What is this SIB project going to do to us?’ ... One of
the strengths of the way it has been done is actually that those concerns and risks have been wellmanaged, and they are now actually working effectively together and we have got a stronger team
now than we had before, because [of] the way that those anxieties, difficulties have actually been
managed.
(Interviewee 18, Director, HMP Peterborough)
92
The funding for this came from a rehabilitation fund which is unique to Sodexo’s operating contract, resulting from
an earlier contract renegotiation. The effect of this funding on the operation of the Peterborough SIB will be
monitored during the evaluation.
45
Lessons from the SIB at HMP Peterborough
RAND Europe
Interviewees from the St Giles Trust indicated that there were no significant overlaps between
their service funded by the SIB and existing local services. They considered themselves to be wellintegrated into the Peterborough Community Safety Partnership, and reported working closely
with existing service providers such as the Drugs Intervention Team.
6.6
Challenges identified, overcome and remaining in implementation of
the One Service
Interviewees from HMP Peterborough, St Giles Trust, and Social Finance mentioned the
following issues arising in the implementation of the SIB at Peterborough.
The need for coordination and drive
Interviewees from the prison saw the reducing reoffending director, employed by Social Finance,
as a crucial position, and one likely to be of benefit to future SIBs.
Identifying offender needs and characteristics
Social Finance reported that further analysis is needed to understand apparently lower levels of
engagement by Eastern European prisoners. Social Finance suggested that it may be that Eastern
European prisoners require less support, or it may be that there are language barriers that prevent
these prisoners from engaging. St Giles Trust would like to recruit volunteers and/or paid
mentors with these language abilities, but has not been able to do so yet.
Social Finance will receive data from the Police National Computer which should indicate
whether or not clients are being reconvicted. If so, this may suggest that they could benefit from
support from the One Service. Social Finance told us that it plans to interview those who refuse
the service or disengage early, in order to establish the reason for this.
Access to the prison for SIB staff
Some of the peer advisers and mentors working under the St Giles Trust intervention are exoffenders, and there are some issues around their access to the prison. Ex-offender case workers
are not permitted to have keys, use the prison computers or visit the wings, and Social Finance
reported that this had been a difficulty. However, we were told that Social Finance were working
with HMP Peterborough to address the information technology issue (which is important
because the One Service assessment is paperless and relies on web access).
Office space for providers
Social Finance has now arranged office space in Peterborough, via the YMCA, as a base for St
Giles Trust staff and the Ormiston Children & Families Trust, and for staff from other providers
who may be involved at later stages.
Releases beyond Peterborough
While Peterborough was selected because it has a relatively high proportion of local releases, there
are still challenges in working with cohort offenders who are not released in the eastern region or
London areas.
St Giles Trust is able to deliver a through-the-gate intervention to prisoners that are released
further afield, but these offenders are then handed over to other local support networks, once
immediate needs such as housing and benefits have been addressed. The St Giles Trust case
worker will continue to hold the case for 12 months after release and will stay in touch with the
client and new provider(s).
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The intervention and uptake so far
Ormiston is funded only to provide family support to those living in Peterborough. However, it
is able to provide a service from its other centres across the eastern region.
6.7
Stakeholders’ assessment of the intervention model and service delivery to date
At the time that research for this report was undertaken, the SIB had been running for a
relatively short period of time and little data was available to stakeholders regarding the progress
of delivery and uptake so far. However, the investors with whom we spoke, as well as the
individuals working within the Ministry of Justice, NOMS and the prison, were all very positive
about the nature of the interventions being commissioned.
There was widespread support among the interviewees for the individualised, through-the-gate
support being offered. Interviewees from the Ministry of Justice, NOMS and investors expressed
their personal confidence in St Giles Trust: an organisation known to many, if not all, of the
interviewees prior to the SIB. One interviewee made explicit reference to St Giles Trust’s ‘track
record’ of previous success in delivering services,93 and another to their ‘evidence of success’.94
These interviewees may have been aware of an evaluation of St Giles Trust’s Through-The-Gate
service conducted by Pro Bono Economics. This found a 40% reduction in reoffending among a
group of more than 500 offenders who had been given the Through-The-Gate service. However,
there are some limitations to the methodology of this report, which mean we must treat these
findings cautiously: they compared reoffending among a group of offenders with whom the St
Giles Trust had worked, with reoffending rates in a national sample of short-sentenced prisoners
(Pro Bono Economics, 2010). The quality of the national data meant that they could not control
for age and other factors, which may have explained differences in reoffending rates. This raises
questions for this SIB about the strength of the evidence base underlying the interventions, but
more widely for other SIBs as to the quality of evidence needed, the kind of evidence which
investors find compelling, and so on.
Evidence as to the effect of mentoring on reoffending is inconclusive; whilst there have been a
number of evaluations of the impact of mentoring, many of these have limited research designs.
Reviewing the literature on mentoring, Jolliffe and Farrington (2007) note that those studies
which applied more robust methodologies tended to find smaller effect sizes, and conclude that
‘mentoring is a promising, but not proven intervention’ (p. 9). With this caveat in mind, they
noted that mentoring programmes in which the mentor and mentee met more regularly (at least
once a week) and spent more time together appeared to be more successful in reducing
reoffending. Further, the evidence suggests that mentoring was only successful in reducing
reoffending when it was delivered along with other interventions (p. 3).
6.8
Summary: recommendations, lessons and conclusions
The One Service has been implemented, and reported rates of engagement by offenders are
high. Initial challenges in implementation largely are perceived to have been overcome by good
working relationships between Social Finance, HMP Peterborough and providers. Early contact
93
Interviewee 6.
94
Interviewee 17.
47
Lessons from the SIB at HMP Peterborough
RAND Europe
with local service providers, and regular provision of information to them during the
development of the SIB, seems to have been important in building relationships that facilitated
implementation.
Impact on other agencies and service providers in Peterborough should be monitored. As
the SIB is delivered over a longer period of time, it may be important to pay close attention to
the ongoing impact of the SIB on other agencies. These include HMP Peterborough, statutory
agencies such as the police, Probation Service, housing agencies and other third sector agencies
that work with the SIB population. In particular, it may be important to consider the impact of
Social Finance commissioning strategies, and whether the SIB is able to provide secure funding
and/or fertile ground for innovative work to service delivery agencies.
The importance of good working relationships with the prison. Both the director and deputy
director of HMP Peterborough reported being supportive of the SIB. Future SIBs in prison
establishments may wish to consider whether and how significant this supportive and productive
working relationship may be.
Possible unintended consequences of SIB implementation within the prison. Our interviews
suggest that, potentially, implementing the SIB may have a positive impact on work with nonSIB offenders within HMP Peterborough. In addition, the SIB may enable HMP Peterborough
to meet some of its performance targets (for example, in relation to purposeful activity).
Conversely, the interviewees highlighted the ways in which running the SIB might make it more
difficult for HMP Peterborough to meet some targets. Those developing future SIBs may wish to
ensure alignment between the outcomes and metrics of the SIB and existing performance
monitoring and performance indicator regimes.
Evidence and track record. Although this was not raised by those in government dealing with
the SIB, investors mentioned their confidence in the St Giles Trust, which they perceived to have
a strong track record in delivering services to offenders. While some of this confidence appeared
to be based upon prior relationships with the Trust, other interviewees explicitly noted what they
perceived as the well-publicised evidence base for the Trust’s work. For future SIBs this raises a
question about the level of evidence of effectiveness that investors and those commissioning
providers may require in selecting and having confidence in providers.
Does the SIB encourage innovation? One of the rationales behind the use of SIBs is that they
are thought to be better placed to encourage innovation in service delivery as well as the funding
of services. Mentoring and signposting is not in itself a new form of service provision. What
appears to be innovative is providing services to offenders serving short prison sentences and
having the buying power to commission a range of separate interventions deemed suitable for
working with the particular offenders that become involved. This scope for innovation is
something that we will examine further in the later stages of evaluation of the SIB.
48
CHAPTER 7
Conclusions and lessons
This chapter draws out the main findings from this research, and in each section indicates where
possible the potential lessons for wider roll-out of SIBs or other payment-by-results mechanisms.
7.1
Departmental investment and creativity
Evidence from the interviewees indicates that the Ministry of Justice has invested a great deal in
getting this SIB up and running. As noted previously, considerable analytical work was required
in defining the outcome measures; significant cost analysis supported negotiations over the value
of outcome payments (and this work has continued); and the Ministry of Justice Procurement
department drafted complex contracts within a short time period. The Ministry of Justice had to
innovate to enable the SIB model to be put into practice, and did so in a relatively short time
period.
Possible lessons for future SIBs and other PBR models: analytical support and creative
thinking are needed.
7.2
Characteristics and skills of future intermediaries
Interviewees’ accounts of the development of the SIB indicate that Social Finance’s ability to
engage and negotiate with different stakeholders was important. It had credibility in the eyes of
some investors through existing contacts and networks, it made a convincing case for the SIB as
an alternative funding mechanism, it quickly got up to speed on the chosen area for the
intervention, and demonstrated confidence in its ability to secure the necessary investment
funding.
Possible lessons for future SIBs and other PBR models: on the experience of this SIB, the
range of skills associated with a successful intermediary may include technical skills (in
negotiating contracts), financial knowledge (selling a financial product), getting up to speed in
the relevant policy areas, and softer relational skills.
7.3
Contracts
Risk transfer
The data gathered in interviews suggest that there has been a transfer of risk from the
government to private investors. However, this transfer, and the contracts themselves, are
untested in many respects: issues that challenge the contractual arrangements and/or require
49
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clarification through the contracts could still arise in the course of implementation and
determining outcomes and payments for this SIB.
Complex contracts
Some interviewees reported that the contracts are complex. This is understandable: the SIB raises
some complex contractual issues and involves many different stakeholders. Drawing on
experience with private finance initiative contracts, complexity in some instances meant that the
actual transfer of risk is not clear. Also, it could be the case in future SIBs that investors and
intermediates will have better-resourced legal and contractual advice than can be readily obtained
or funded by government, which could result in less than optimal terms for the government.
Possible lessons for future SIBs: some interviewees reported an appetite for, and interest in,
developing some standard contract terms and definitions for SIBs, which could make drafting
and signing up to future SIB contracts an easier process.
7.4
Investors
Aligning with investors’ missions and motivations
Through our interviews we were able to explore investors’ reported motivations for investing in
the SIB. They noted that they were keen to fund innovation, that this investment was aligned
with their charitable missions to do public good, and that the SIB investment allowed some
investors to improve outcomes in an issue area of particular interest to them (criminal justice).
Possible lessons for future SIBs: it may be helpful to undertake analysis of the investment
market relevant to a SIB in order to identify likely funders for SIBs in a new issue area and their
particular interests and motivations.
Addressing or anticipating barriers to investment
This research highlighted some potential barriers to investment, namely: tax rules that restrict
charities’ ability to put money into a SIB, and lack of clarification of trustees’ duty to maximise
financial return.
Possible lessons for future SIBs: Social Finance has taken advice on some of these issues from
HM Treasury and HM Revenue & Customs already in the course of developing the
Peterborough SIB, and future SIB development may benefit from this learning. The government
could consider whether any steps could be taken to offer tax incentives.
Testing appetite in a wider investment market
The majority of investors were foundations and charities. The appetite for a wider range of
investors is not tested in this SIB, although we understand from Social Finance that work to
assess this is currently underway.
7.5
Outcome measures
Trade-offs between measurements and ways of measuring
A robust measurement of the impact of SIB-funded interventions on outcomes is central to any
SIB. In selecting an outcome measure there are a number of competing considerations: the desire
to develop a methodologically robust measurement, which allows those paying for improved
outcomes to confidently attribute any change in outcomes to the intervention; the need to ensure
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Conclusions and lessons
that measurement is possible within time constraints and given the analytical resources available;
and the need for the measure to be clearly understandable to the stakeholders involved.
Attribution problems with wider roll-out
The plan to roll out other SIBs and payment-by-results models could create a situation where
several agencies implementing interventions in overlapping areas, or areas that impact on each
other, could claim to have ‘caused’ any improved outcomes. It is worth considering ways of
handling this at the point of determining which interventions to implement where and with
whom, and/or in attributing causality and appropriate outcome payments. Otherwise,
government and others involved in payouts could be asked to ‘pay twice’ for the same outcomes.
Possible lessons for future SIBs and other PBR models: those planning future SIBs or PBR
models may wish to consider whether several interventions may impact on outcomes for the
proposed target group. This may have implications for determining the counterfactual – that is,
what would have happened in the absence of the SIB-funded intervention.
7.6
Outcome payments
Cross-departmental outcomes
The Ministry of Justice is the only government department paying out for any improved
outcomes achieved through this SIB. However, there is a pressing need to explore how outcome
payments might be shared across national and local government departments, and this was
identified by many interviewees as well as the wider literature around SIBs as a crucial issue.
Possible lessons for future SIBs and other PBR models: future pilots might devise mechanisms
to facilitate cross-departmental commitment to outcome payments.
Impact of time until return on investment
The interviewees in this research noted that quicker outcome payments would allow investors to
use their capital more efficiently, that is, to reinvest some of the outcome payments to pay for
service delivery, and this may make investment in a SIB a more feasible or attractive prospect.
Possible lessons for future SIBs: consideration and/or analysis could be undertaken of the time
until the first payment to investors (if outcomes are improved), and the knock-on effects on
factors such as the efficient use of capital.
Procurement
Some interviewees within government felt that they may have been able to arrive at a more
favourable financial settlement for the Ministry of Justice if the SIB had been competitively
tendered, although they emphasised that if the SIB is successful in reducing reoffending, the
arrangement still represents value for money for the Ministry of Justice.
Possible lessons for future SIBs: it is beyond the scope of this phase of the research to assess the
relative weight of these arguments. However, it could be useful to consider the suggested possible
advantages of using non-traditional methods of procurement, such as collaborative development
and commissioning. If future SIBs are to be commissioned, this will rely upon a supply of
intermediaries or delivery agencies.
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The intervention
This research indicated that Social Finance took steps to ensure buy-in at a local and regional
level in Peterborough. This was facilitated during the early stages of development by the NOMS
Regional Offender Manager and a member of the local criminal justice board. Ongoing
facilitation is provided by the Social Finance Reducing Reoffending Director.
Possible lessons for future SIBs and other PBR models: interventions take place in a local
context, and may impact upon many different statutory and non-statutory organisations,
voluntary sector organisations and other existing service providers. It may be in the interests of
smooth implementation and effectiveness to take time to build relationships with, and secure
buy-in from, organisations. Early contact with local agencies appears to have been important in
the SIB at HMP Peterborough.
The investors with whom we spoke expressed confidence in the St Giles Trust and their ability to
work with offenders.
Possible lessons for future SIBs and other PBR models: providers may benefit from
engendering investor confidence: for example, by commissioning evaluations of their work.
52
REFERENCES
53
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New Philanthropy Capital (2010) Manifesto for Social Impact. London: New Philanthropy
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Social Finance (2010c) Social Finance launches first social impact bond. Press release,
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Strickland, P. (2010) Social Impact Bonds – The Pilot at Peterborough Prison. House of
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58
APPENDICES
59
Appendix A Methodology and approach –
additional information on literature search and
key informant interviews
This report is based upon:
•
Targeted literature research
•
Semi-structured interviews
•
Review of the contract between the Ministry of Justice and Social Finance
•
Police National Computer data provided by the Ministry of Justice.
Targeted literature search
We reviewed the literature on:
•
Mentoring and signposting (the ‘what works’ literature)
•
Social investment
•
Social Impact Bonds (SIBs)
While the first two topics have been written about extensively in academic, peer-reviewed
literature, so far SIBs have been discussed mostly in the grey literature (written largely by
Social Finance and The Young Foundation).95
Interviews
In collaboration with the Ministry of Justice96 we developed a list of stakeholders from the
organisations involved in setting up the SIB. A list of interviewees is provided in Table 1 in
Chapter 1 of this report. We developed an interview protocol which covered the areas
specified by the Ministry of Justice as of interest in this interim report (the interview
protocol is included in Appendix B).
We approached interviewees by email. All those approached agreed to meet with us (except
for one who provided us with an alternative interviewee in the same department).
95
We found reference to the existence of SIBs in some recent peer-reviewed publications, for example Fox, et al.
(forthcoming), and Ledger (2010), but no discussion of analysis of their implementation or likely effectiveness.
96
The Ministry of Justice suggested an initial list of possible interviewees. RAND Europe researchers added
other interviewees who we thought would provide useful insights.
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We conducted face-to-face interviews with 22 stakeholders. The interviews lasted between
40 minutes and 1.5 hours. The content and focus of each interview varied according to the
particular role and expertise of each interviewee, but we allowed each interviewee the
opportunity to comment on all topics. Taking a semi-structured approach, we provided
interviewees with an opportunity to raise issues not included in our interview protocol.
Interviews were recorded and fully transcribed. The interview transcriptions were
independently analysed by three members of the RAND Europe research team. We
conducted follow-up telephone conversations and emails where necessary to clarify any
points arising from the interviews. The approach to the analysis of the interviews and a
discussion of the limitation of the research approach are outlined in section 1.4 in Chapter
1 of this report.
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Appendix B Interview protocol
This protocol was used to structure key informant interviews. It was designed by the
RAND Europe research team, in consultation with the Ministry of Justice.
SECTION 1. Open questions
1.1.
Could you tell me about your own involvement in the development of the SIB
initiative and its operation so far?
1.2.
Could you describe your organisation’s role in the SIB?
1.3.
What is your view of the SIB?
- In terms of the organisations involved, their roles and responsibilities, the
benefits and costs.
- The feasibility and suitability of the SIB model.
SECTION 2. Contractual process and structure
Overview of contractual processes
2.1.
Were you involved in any of the contractual negotiations/discussions for the
SIB?
If no, move to section 3. If yes, continue to next questions.
2.2.
What was your involvement in the contractual negotiations/discussions?
- For example, were you involved in negotiations, reviewing, attending
meetings?
2.3.
Who else was involved in negotiations/discussions for the SIB?
2.4.
Were there people who were not involved (in drawing up the contracts) but
you thought should have been?
2.5.
Who, or which organisation(s), would you say were the main drivers in the
contractual process?
2.6.
Were there any sticking points or challenges in drawing up the contracts?
- If so, how were these overcome?
2.7.
Were any aspects of the contractual process easier than expected?
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If so, how and why?
Meaning/implications of the contracts
2.8.
What are your organisation’s/agency’s contractual responsibilities under the
SIB?
- To check understanding, clarity and identify accountability under the SIB
model?
2.9.
Is this the role you envisaged for your organisation?
- Would you change it in any way?
2.10. Do you feel your organisation/agency is carrying any risks (contractually)?
- What are they?
- How do they compare to the risk carried by other organisations/agencies?
- Are you taking steps to monitor and mitigate against these risks?
2.11. Do you feel your agency is receiving any benefits, contractually?
- For example, [for providers] long-term funding, [for investors] might get a
return on investment where wouldn’t have previously, [for Ministry of Justice]
service being provided where none was previously.
2.12. Do you have a view on how all of the contracts work together?
Performance monitoring
2.13. Can you say anything about how the performance of your organisation is
monitored under the SIB contracts?
2.14. Can you say anything about how the performance of other organisations is
monitored under the SIB contracts?
Views on the quality of the contracts
2.15. Do you feel there are any particular strengths and weaknesses of the final
contracts, and if so, what are they?
- For example, in terms of reporting, the time spent in negotiation, the level of
risk?
SECTION 3. SIB development process
3.1.
Can you say anything about how offender management (rather than other
policy areas such as health care or education) was selected for this SIB?
- Are there any positive or negative aspects about the choice of offender
management?
3.2. Do you know how and why HMP Peterborough was selected?
- Do you know whether other institutions were in the running?
- If so, do you know why they were not selected?
- Would you say there are any particular positive or negative implications of the
choice of HMP Peterborough?
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Appendix B
SECTION 4. Investors
4.1. Were you involved in any way in developing the investment model for the SIB?
- If no, do you feel able to comment on the development of the investment
model?
- If no, move to section 5. If yes, continue to next questions.
Amounts of investment desired and secured
4.2.
Do you know how the overall amount of investment needed for the SIB at
Peterborough was decided?
4.3. Do you know how much investment was actually secured?
Investors and their identification
4.4. Are you able to comment on the list of investors in this SIB?
- Who are they?
- Are they appropriate?
- What are their relative contributions?
4.5. Are you able to say anything about how potential investors were identified?
Securing investment
4.6. Were there any challenges in securing sufficient investment?
4.7.
Do you know if there were any organisations/individuals that considered
investing and chose not to invest?
- Would you be able to tell us anything about them?
- Do you know, or could you speculate on, their reasons for not investing?
4.8.
Do you know whether potential investors were given information about the
intervention, and if so, what information?
Factors relevant to investment decisions
4.9.
What would you say were the likely factors which influenced decisions about
whether or not to invest?
4.10. The Ministry of Justice have listed a number of factors which they think may
have played a role in decisions to invest or not. If I read out this list, perhaps
you could score each on how important you think it is – where 1 is not
important at all, and 10 is very important, a ‘deal breaker’:
a.
b.
c.
d.
e.
f.
g.
Speed of process
Length of time until outcome payment
Criminal justice setting
Nature of the intervention being delivered
Financial return on investment
Perceived social return on investment
Being involved in an innovative scheme
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h. Profile for participating organisations
i. Other: Please specify
Ongoing information
4.11. How much ongoing information about the initiative is provided to investors?
-
If you are able to comment on this, could you give us a rough estimate of how
long it takes to provide that information?
Closing question
4.12. Do you have any other comments to make in relation to investors or the
investment process?
SECTION 5. Methodology for determining outcomes measures and outcome
payments
5.1.
Were you involved in any way in the development of the outcome measures
and/or outcome payments under the SIB?
Comment on elements of outcome measures and outcome payments
5.2.
Could you describe and comment on the outcome measures used in the SIB at
Peterborough, and how these were selected?
- How is effectiveness or success measured?
- Could you describe and/or comment on the cohorts of offenders used in the
measurement of outcomes?
5.3.
Could you describe and comment on the role of the independent assessor in
measuring outcomes, and in calculating outcome payments?
Payments for interviewee’s organisation
5.4.
What proportion of funding (for your agency) is outcome-based as opposed to
upfront regular payments?
5.5.
How does the way the SIB is funded differ from your typical/previous funding
arrangements?
- Are there particular implications of this SIB funding arrangement for your
organisation?
Closing questions
5.6.
Are there any particular strengths and weaknesses of the outcomes and
payments arrangements, and if so, what are they?
5.7.
Do you think these measures and payment levels work equally well for all
parties?
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Appendix B
SECTION 6.
Stakeholder opinions on the intervention model being used
6.1.
Were you involved in any way in the development of the intervention model
for the SIB?
- If no, do you feel able to comment on the development of the intervention
model?
- If no, move to section 7. If yes, continue to next questions.
6.2.
We are aware that the St Giles Trust has been commissioned to provide
mentoring and signposting services for short-sentenced prisoners at HMP
Peterborough. Do you know of any other interventions or providers under the
SIB?
6.3.
Do you know how the intervention model and the providers were selected?
6.4.
Do you know if any other options were considered?
6.5.
How much scope is there for a contractor to decide how to deliver the
intervention?
- i.e. is there flexibility within the contractual model to adjust the way that the
intervention is delivered, or to deliver other interventions altogether with the
aim of reducing reoffending?
6.6.
Do you know if there is scope for other delivery organisations to be brought in
under the SIB?
- If yes, how? Do you know if they have to be added to the contract or if they
would work under a subcontracting relationship?
6.7.
How would you summarise your views, overall, on this intervention model?
SECTION 7. Exploring the counterfactual
Funding before and after for organisations involved
7.1.
How was your organisation funded before the SIB?
OR How were the organisations involved funded before the SIB?
7.2.
Do you still receive this funding as well/are you still seeking this type of
funding?
OR Do the organisations involved still seek their previous methods of funding?
Provision at HMP Peterborough before and after the SIB
7.3.
What service provision, if any, was there for short-sentenced prisoners at HMP
Peterborough before the SIB?
7.4.
Have any services been decommissioned at HMP Peterborough or in the
community as a result of the mentoring and signposting intervention under the
SIB?
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Commissioning before and after the SIB
7.5. How did your organisation commission services before the SIB?
7.6. How will you commission services after the SIB?
Investing before and after the SIB
7.7. How did your organisation invest before the SIB?
7.8. How will your organisation invest after the SIB?
Alternative funding for the interventions
7.9.
Would you have delivered this intervention at HMP Peterborough apart from
the SIB?
OR Would the intervention have been delivered at HMP Peterborough apart
from the SIB?
Alternative models of funding
7.10.
Were there other alternative funding models that you considered?
- Other than the SIB?
7.11. Have you since heard about other alternative funding models that you prefer?
SECTION 8. Assessing service delivery to date
General introductory question
8.1.
Could you say something about the implementation and operation of the
mentoring and signposting initiative so far?
- In what ways would you say the mentoring and signposting intervention is
working well?
- In what ways would you say the mentoring and signposting intervention could
be improved?
The intervention model in practice
8.2.
Have any changes been made to the planned intervention model since the start
of the SIB?
8.3.
Have you operated this intervention in other settings, before the SIB?
- How is it similar or different? Any modifications?
8.4.
Have you faced any particular challenges with the first cohort of participants?
- If so, in what ways have you/do you intend to overcome these challenges?
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Appendix B
8.5.
What is the rate of uptake among the cohort?
8.6.
What are the main reasons for any unwillingness to engage, in your opinion?
8.7.
What are the main reasons for willingness to engage, in your opinion?
Staffing
8.8.
Have you encountered any particular challenges with recruiting or training
mentors or staff to deliver the scheme?
- If so, what have been the effects?
External relationships with other organisations
8.9.
How would you describe your relationships and collaborations with:
a. HMP Peterborough
b. The police
c. Probation Service
d. Jobcentre Plus
e. Housing services
f. Substance misuse services
g. Mental health service
h. Other ‘signposting’ agencies
8.10. Have you encountered any particular challenges with agencies to which you
signpost clients?
SECTION 9. Accountability within the SIB
9.1.
Is there a particular organisation you see as driving or overseeing the SIB
overall?
- Which organisation would you say is ultimately accountable for the success or
failure of the SIB at Peterborough?
9.2.
Within your organisation, who oversees the management of:
a. Contracts
b. Investors
c. Communications
d. The relationship with the Ministry of Justice
SECTION 10. Closing question
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10.1. Would you say that there are any particular lessons learned by your agency in
terms of the SIB so far?
10.2. What would success in the SIB look like for your organisation?
10.3. [Social Finance and St Giles Trust ONLY] Do you have any ideas for
suggested changes or improvements to make for the next cohort?
10.4. Do you have any views about rolling out wider SIB/payment-by-results models
in offender management?
10.5. Have you any other observations to make about the SIB that have not yet been
mentioned in our discussion?
70
Appendix C Further information on the
intervention model
The following is a more detailed description of the services provided to offenders under the
SIB at HMP Peterborough at the time when our interviews were conducted. This account
has been drawn entirely from our interviews, in particular those with the St Giles Trust
and Social Finance. Information about the service provided by the Ormiston Children &
Families Trust was provided by Social Finance.
Services provided by St Giles Trust
St Giles Trust has been commissioned by Social Finance to provide a through-the-gate
service. St Giles Trust has previously delivered its Through-The-Gate intervention across a
number of London boroughs, commissioned by London Probation Service to work with
offenders under statutory supervision by the Probation Service.
St Giles Trust’s approach focuses on establishing a credible working relationship with each
offender while they are in prison, and transferring this relationship into the community,
where the offender will be provided with support and advice about accessing the services
and resources that they need in order to avoid reoffending.
The St Giles Trust team is made up of paid staff, volunteers within the prison and
volunteers in the community. The volunteers within the prison are usually prisoners
serving longer sentences who are undertaking, or have completed, a NVQ at Level 3 in
Advice and Guidance. The role of these volunteers is to advise and support offenders,
encourage them to access services and support while in prison, and to follow up on any
missed appointments. The use of volunteers within the prison ensures that St Giles Trust
has access to offenders throughout the prison.
Within the prison each offender is shown a DVD which informs them of the One Service.
HMP Peterborough has a Link Centre, where staff from various agencies offer support
such as housing and drug rehabilitation. In the Link Centre St Giles Trust staff conduct
assessments and write action plans for offenders who wish to engage with their service. St
Giles Trust provides advice in accessing other services (signposting), direct support in
securing accommodation on release from prison, and a working relationship with a
member of the team for support.
Depending on the length of sentence, St Giles Trust aims to meet with its target offenders
between one and three times while they are in prison. When cohort offenders are released,
St Giles Trust aims to meet them at the gate. Offenders who are engaged with the service
will be helped to secure accommodation, access benefits and receive any other support that
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Lessons from the SIB at HMP Peterborough
RAND Europe
they have been identified as needing. Offenders who choose not to engage with the service
will be given contact details, should they need support in the future, and will be given
assistance with accommodation if this is necessary. These contact details include advice
about the ‘community sticker’ access points.
In the community St Giles Trust continues to work with offenders using its staff team and
mentors. The mentors are usually ex-offenders who have completed their NVQ in prison
and have now been released into the community. Support and advice is provided to
offenders depending on their changing needs.
In general, the St Giles Trust intervention can be described as needs- and relationshipfocused. The offender’s own perceived needs are prioritised, rather than what the case
worker considers to be the best course of action, in the hope that this will secure their
engagement and allow the St Giles Trust team to focus on other needs, such as
employment or drug rehabilitation. The relationships are designed to offer through-thegate support, a credible role model and support in accessing various agencies and services.
With an emphasis on engaging the offender with the service, St Giles Trust assesses
offender needs using a relatively short initial assessment form that focuses on offenderreported primary needs. The needs assessment includes a discussion about their
accommodation requirements and history, which in turn can divulge useful information
about their other needs, which St Giles Trust can use to help to write an action plan.
A fuller needs and risk assessment is carried out subsequently and revisited at regular
intervals.
Transferring the St Giles Trust service from London to Peterborough
The service model delivered by St Giles Trust in Peterborough differs from its previous
experience of working with offenders in a number of ways. First, the offenders are on short
sentences (less than 12 months), whereas previously St Giles Trust has worked mostly with
longer-sentenced offenders. Second, the Peterborough model is based on the location of
the prison rather than the release location of the offender, and so involves working with
offenders who may be released into areas some distance from their bases in London and
Peterborough. Third, the support needs identified by prisoners are different: early
indications suggest that the level of drug addiction and homelessness is lower in
Peterborough than among the cohort of offenders that the St Giles Trust encountered in
their Through-The-Gate service in London boroughs. More Peterborough prisoners are
requesting support with finding employment, education and training.
Services provided by Ormiston Children & Families Trust
Ormiston Children & Families Trust (CFT) is a children’s charity based in the East of
England. They have experience of working in prisons – running visitors centres, facilitating
children’s visits and delivering a prison-based parenting programme.
The Ormiston CFT One Service team consists of two part-time paid staff who are
overseen by a Service Manager and an Area Manager. Referrals to the team come via
several routes including self-referral, through the St Giles Trust, and from schools, GPs,
anti-social behaviour teams and specialist agencies. Their role is as follows:
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Appendix C
•
to support a family’s preparation for an offender’s release, including helping family
members to understand prison processes and sharing critical information with
them;
•
to facilitate family input into an offender’s resettlement plan, particularly in those
areas where family support is critical to successful implementation;
•
to provide support in relation to emerging behavioural, emotional or social issues
experienced by children, young people and families, which might be associated
with the reintegration of the offender into the family. This may include:
-
One-to-one support for children in the home or school setting
-
Liaison with teaching staff, pastoral carers, Parenting Support Advisors
-
Parenting support
-
Liaison with community criminal justice groups such as Anti-Social Behaviour
Groups, Safer School Partnerships, and Safer Neighbourhood Teams.
Data collection and monitoring the cohort
Social Finance commissioned Meganexus to develop a new database system for
comprehensive data collection and monitoring throughout the SIB. This database will be
web-based – accessible to staff working in the prison and the community – and will record
information on all of the different interventions with offenders in the cohort. One
interviewee97 suggested that this database will contain more information than current
prison or probation information systems.
97
Interviewee 1.
73
Appendix D Tables – age and ethnicity of the
Peterborough cohort as at March 2011
Table D-1 Breakdown of offenders by age band – Peterborough cohort compared to national
sample
Age band
21–24
25–34
35–44
Peterborough discharges
19%
43%
Q1 2008 data
21%
42%
25%
27%
45+
11%
11%
Source: Ministry of Justice extract from the Police National Computer
Does not include one member of the Peterborough whose age was not known (no release date
was provided for this individual, so age at release could not be calculated).
Table D-2: Breakdown of offenders by ethnicity – Peterborough cohort compared to national
sample
Ethnicity
Peterborough discharges
White
87%
Black
6%
Asian
5%
Other
2%
Source: Ministry of Justice extract from the Police National Computer
Q1 2008 data
83%
10%
5%
2%
Does not include four members of the Peterborough cohort whose personal details could not be
matched with the details of offenders in the Police National Computer data held by the Ministry
of Justice, and two members whose ethnicity was not recorded
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Appendix E Timeline of SIB development
Q4 2008
Policy
Q1 2009
Social Finance engaged civil
servants with concept
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Social Finance worked through technical issues with civil servants, including
government accounting treatment, value for money, business plan development
Ministerial engagement and support (Treasury and Ministry of Justice)
Contracting
Social Finance
developed draft term
sheet
Outcome
measures
Social Finance developed
measurement hypothesis
Operating
model
Social Finance identified
intervention program that
could be funded in this way
Social Finance and Ministry of
Justice finalised contract terms
Ministry of Justice
wrote contract
Refined measurement approaches with
Ministry of Justice analytical team
Contract
amendments
SIB contract
signed 18
March 2010
Social Finance created
straw man SIB structure
Social Finance gained support from criminal justice
leadership in Peterborough and Cambridgeshire
Social Finance and Kalyx built operating model
Implemented service
Social Finance hired external consultant to
review service delivery landscape and
conduct due diligence on non profits
Structuring
Social Finance developed legal structure with
Allen and Overy
First prisoners
released to One
Service 9
September 2010
Set up legal entities
Social Finance worked with
HMRC on tax treatment
Investor
development/
capital raising
Social Finance held discussions with potential investors
Social Finance developed
investor documentation
Secured investment
commitments and finalised
subscription agreements
* Subsequent funding closes were achieved in November 2010, January 2011 and February 2011
Source: Social Finance
77
First close* 16
August 2010
Appendix F Logic model of the SIB
Contextual
aspects
Inputs
Activities
Outputs
Economic
climate
Media interest –
high-level
attention and
emphasis
Political will to
test the scheme
Financial
support from
government
departments
Informal discussions/
pre-planning
Informal support for the
scheme across stakeholder
groups
Appropriate skill mix for
planning and negotiation
Research on
pre-release issues
Existing service provision –
e.g. drug treatment
Provider understanding and
knowledge of what works
Understanding of financial
vehicles (Social Finance)
Funding from investors
Back-up funding
arrangements provided by
Ministry of Justice and Big
Lottery Fund
Agreement of metrics associated with
outcome payment for scheme
Agreement on balance of investment across
group of investors
Negotiation of risk burden between investors,
Ministry of Justice and Big Lottery Fund
Agreement of key contracts between all key
parties (Social Finance, Ministry of Justice,
Investors, Big Lottery Fund, Sodexo, etc.)
Selection of pilot site (Peterborough or West
Midlands)
Design of customised intervention model for
pre-release and post-release stages
Provision by St Giles Trust of intensive
support for cohort
Recruiting and training of offenders as
mentors and tutors for cohort
Provision of support by other providers on an
as-needs basis
Ongoing liaison with local stakeholders and
providers
Numbers of short-term
offenders in the cohort
Number of cohort group
actively engaged in the
scheme
Number of ex-offenders
recruited into mentoring or
support roles
Number of cohort group
engaged in educational
activity
Number of cohort in
employment
Extent of secure funding
provided to social enterprise
or other providers of support
services to cohort group
Number of new jobs created
in provider organisations
Number of existing jobs
protected/retained in
provider organisations
79
Anticipated impacts
(immediate, medium and
longer term)
Anticipated outcomes
(ultimate)
Percentage change in
reconviction events among
cohort group
Change in levels of soft
skills of the cohort group
(e.g. communication skills,
confidence-building)
Change in levels of hardskills employability of
members of the cohort
group
Change in levels of interest
by new pool of investors
Track record of delivery of
support services by
providers
Ongoing availability of
support services for shortterm offenders through local
providers and/or social
enterprises (i.e. business
survival of support
organisations)
Outcome payment made to
investors
Financial savings to
taxpayers
Percentage reduction in
reoffending rates
Increased demand for
expansion of the scheme
within this sector and to
other sectors
Raised expectations of
outcomes for short-term
offenders
Reduction of negative
effects of crimes committed
by short-term offenders
(due to fewer crimes
occurring)
Openness to alternative,
innovative solutions for
reduction of offending and
management of
ex-offenders